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Steady Thinking for Interesting Times!
HOW TO INVEST IN THE STOCK MARKET IN 2020-21
These are some very simple ideas that I will be following in my investing this year.
We will be posting a link to selected investing portfolios that should help you in your thinking process.
Rules for Trading Options and selected stocks January 2020- August 2021
1. Only buy in the money strike price or better. If you cannot afford to buy in the money and time do not buy less expensive strikes.
2. Minimum time spread 60 days.
3. Only buy individual stocks or ETF's you understand.
4. Stock must have a defined catalyst within the first two weeks.
5. Only buy on market down days or on a severe oversold plunge.
6. Avoid paying a premium and try to sell on an up day with a premium.
7. Research three month strike prices forward- no open interest- do not buy. Don't be alone in the trade.
9. Kill losing trades quickly- if the catalyst passes without the action expected- get out.
10. If stock falters on resistance for three days- get out.
11. Be aware of when earnings dates are. If stock does not pop on earnings get out quick.
12. Buy 2 positions and then 2 more if your idea is still sound in a day or two.
13. Be familiar with the stock and its pattern. Never buy options in a stock you don't know.
14. If there is significant inside selling only buy puts.
15. Under no circumstances get closer than 3 weeks to expiration.
16. If the market moves against you in triple digits get out if you can. Stocks don't fight the trend.
17. Playing puts requires more homework than calls. Better to buy calls in undervalued ETF's instead.
18. Understand that TV advice may be contrary to actual positions held. Find three confirming reasons to buy.
20. Time is your enemy. Don't pay for a premium and don't try to run out the clock. You will not be spared.
21. The expiration date is the MOST important piece of information. Never get within 3 weeks of it.