OptionSmart.com…OptionsMart.com…
																		02/22/05
	BEARISH PLAY: Buy Put Strategy
	This module is empty because the picks found had very low probability to be profitable.
														Stock Trends		Sector Trends		Option
	Symbol	Last	Buy to Open					Last	Target	Stop	1)	2)	Time Value	Daily	Weekly	Daily	Weekly	Symbol
	WLP	120.95	Jan-06	125.00	Put	at	13.90	15.10	14.4	6.1	64%	0.1%	11.05	Down	Up	Down	Down	YFMME
	0	0.00	Jan-00	0.00	Put	at	5.40	0.00	6.2	2.3	0%	#ДЕЛ/0!	0.00	Down	Down	0	0	0
	0	0.00	0	0.00	Put	at	0.00	0.00	0.0	0.0	0%	#ДЕЛ/0!	0.00	Up	Down	0	0	0
	Spread	0.00	0	0.00	Put	at	0.00	0.00	0.0	0.0	0%	#ДЕЛ/0!	0.00	Down	Down	0	0	0
	WLP	0.00	38412	130.00	Put	at	9.30	9.10	9.3	5.1	0%	#ДЕЛ/0!	0.00	Down	Down	0	0	WLPOF
	0	0.00	0	0.0	Put	at	0.00	0.00	0.0	0.0	0%	#ДЕЛ/0!	0.00	Down	Neutral	0	0	0
			0	0.0							0%	0.00	0.00	Down	Down	0	0
			0	0.0							0%	0.00	0.00	Down	Down	0	0
	1) "No Loss" Probability. 2) Expected 1-Day Return.
	Short Glossary
	"Buy Put" Strategy
	Potential profit: a) When the stock price is below the break-even. b) Limited to break-even minus stock price. Maximum loss: Premium paid. Time value impact: Negative. Break-even: Strike minus premium paid.
	Example. Buy XYZ Dec 100 Put. Net Premium: Pay 5. Break-even: 100-5=95. Profit when: : Stock price is below 95. Potential Profit: 95 - stock price. Potential Loss: 5.
	Break-even. Point at which gains equal losses. This is the market price that a stock must reach for an option to avoid loss if exercised. For a call, the break-even equals the strike plus the premium paid.
	Time Value. Amount by which the current market price of an option exceeds its intrinsic value (the difference between the stock price and the strike). This additional value of an option is due to the volatility of the market and the time remaining until expiration.
	"No loss"  Probability. Once you set a certain minimum level for this parameter, you can reject the picks that go beyond your desired risk level.
	Expected Profit is computed using the probability of profit and option prices over the projected probabilities. It is equal to the probability of profit multiplied by the price and sum over all possibilities.
	Example.
	Outcome 1. Probability = 0.1, Profit= $6
	Outcome 2. Probability = 0.3, Profit= $4
	Outcome 3. Probability = 0.2, Profit= $1
	Outcome 4. Probability = 0.2, Profit= -$1
	Outcome 5. Probability = 0.1, Profit= -$2
	Outcome 6. Probability = 0.1, Profit= -$3
	Expected wins = $2.00 = 0.1*$6+0.3*$4+0.2*$1, Expected losses = $0.70=0.2*$1+0.1*$2+0.1*$3.
	Expected profit equals the wins minus the losses, or $1.30.  Next, to compute the odds of the trade, the expected wins are divided by the expected losses.  In this case, the odds of success equal 2/0.70 or 2.9 to 1.
	As a rule, when searching for picks, two of the three variables - odds of success, No losses probability, and expected profit should benefit the trade.  Generally speaking, traders struggle for odds higher than 1:1.  A ratio of 3:1 tells the trader that he or she is risking $1.00 for the potential of making $3.00.  In the same way, most traders make every effort to find picks that have positive expected profits.
	Stock Technical Signals are based on various technical indicators for daily and weekly charts. Usually, swing traders check weekly charts to avoid fighting longer-term trends, while investors check daily charts for better timing of entry/exit points.
	Sector Trends.  We distinguish short-term and intermediate- term time horizons, based on various technical indicators for daily and weekly charts.
	Put option. The right, but not the obligation,  to sell the stock at a predetermined price (also known as the strike) at any moment before the expiration date for a paying a premium.
	Expiration Date. The day when an option contract becomes void (the Saturday after the third Friday of the expiration month).
																Return to the Main Page
	There is risk in trading options.  One's financial suitability should be considered carefully before placing any trades.  Past performance is not indicative of future results.
	Copyright  © 2005 OptionSmart.com (Stock Markets Institute). All rights reserved.