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Michael Thomsett

Options trading: The Protected Covered Call Ratio

By Michael C. ThomsettNov 23, 2011

The ratio write consists of writing a combination of covered and uncovered calls. The uncovered portion is at risk, but the strategy is not as high-risk as just writing uncovered calls. The combination of time decay and implied volatility makes a well-timed ratio write a safe strategy, assuming all of the right elements are in place. For those seeking more protection than what is provided by time decay, you can protected the uncovered portion with a higher-strike long call.

Michael Thomsett

Options trading: Four Ways to Reduce Covered Call Ratio Risks

By Michael C. ThomsettNov 17, 2011

The ratio write is a variation of the covered call. It increases market risk but, properly structured, those risks are manageable for moderate investors and in some formations, even for conservatives. If you like the covered call, you will probably also like the ratio write.

Michael Thomsett

Candlestick Charting - thrusting lines and separating lines

By Michael C. ThomsettNov 10, 2011

Candlestick formations often are described with aggressive imagery. For example, the thrusting lines and separating lines are two kinds of double-session candlestick formations that foreshadow trend reversal. The thrusting lines is especially strong because it consists of two long candlesticks with a flip in the direction. The separating lines formation has a significant but invisible gap, making it equally strong as a sign of coming price reversal.

Michael Thomsett

Candlestick Charting - meeting and piercing lines

By Michael C. ThomsettNov 3, 2011

Many candlestick formations have graphic and descriptive names. This helps to keep the dozens of candlestick indicators clear in your mind. Among these are several two-session patterns including the meeting lines and piercing lines patterns. These serve as great confirmation signals at the end of a trend, signaling potential reversal. For day traders and swing traders, these kinds of subtle for informative signals are quite valuable.

Michael Thomsett

Webinar: Managing Risks in Trading Options

By Michael C. ThomsettNov 2, 2011

Can you manage risks while trading options?

Michael Thomsett

Candlesticks - Harami and Harami Cross

By Michael C. ThomsettOct 27, 2011

“Harami” means “pregnant” in Japanese, an accurate description of the appearance of this two-session candlestick signal. This pattern is the opposite of the engulfing pattern, in which a small session is surpassed, or engulfed, by the one that follows. In the harami, a long session is followed by a much smaller session of opposite color. This is the pregnant part, the protrusion that signals a reversal.

Michael Thomsett

Candlestick Charting - the engulfing pattern

By Michael C. ThomsettOct 20, 2011

A highly reliable two-session candlestick indicator is called the engulfing pattern -- the second session is longer on both sides, “engulfing” its opposite-colored predecessor. Two attributes are needed to make it a true engulfing pattern. First, the real body of the second session is extended higher and lower than the previous day and has the opposite color. Second, both upper and lower shadows should also be longer both above and below the previous day.

Michael Thomsett

Candlestick Charting - Single-Stick Reversal Signs

By Michael C. ThomsettOct 13, 2011

Three candlestick signals consist of single sessions, but unlike most candlesticks, the color of the real body does not matter. What does matter is where these indicators are found within the current trend. So the three -- the spinning top, hanging man, and hammer --- are valuable reversal flags, expansions on what day traders and swing traders like to call “narrow range days.”

Michael Thomsett

Candlestick Charting - single-stick reversal signs

By Michael C. ThomsettOct 13, 2011

Three candlestick signals consist of single sessions, but unlike most candlesticks, the color of the real body does not matter. What does matter is where these indicators are found within the current trend. So the three -- the spinning top, hanging man, and hammer --- are valuable reversal flags, expansions on what day traders and swing traders like to call “narrow range days.”

Michael Thomsett

Candlestick Charting - the doji candlestick

By Michael C. ThomsettOct 6, 2011

The Japanese word doji means mistake. Can a mistake point to a strong charting signal? The doji candlestick occurs often and is a very valuable signal. Even though it contains only a single session, it is a meaningful red flag.

Alan Lurie

The True Nature and Power of Repentance and Forgiveness

By Alan LurieOct 3, 2011

Over the last few weeks I have received several mass e-mails with similar messages:

“In the spirit of the month of Elul – when we ask for forgiveness and prepare for repentance during the coming Holy Days - if I have in any way harmed or offended you, please forgive me.”

Michael Thomsett

Candlestick Charting - the Marubozu indicator

By Michael C. ThomsettSep 29, 2011

Candlesticks are very revealing, especially as confirmation signals or as early warning of a coming reversal. Among the most revealing is the Marubozu, with means “bald.” It is so called because the stick has little or no upper or lower shadows.

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