CTSH & JOYG Trade

So where to begin? CTSH was a huge disappointment.... This stock moved very well in the past, however I decided to take a small loss of $180 so my capital isn't tied up any longer which will allow me to reinvest it. Yesterday their Q4 report came out and unfortunately investors were not satisfied with the results; they were expecting a lot more...

I have been pretty busy and didn't have the chance to update you guys on the JOYG trade I placed. It was overall a good trade; a 33% ROI isn't too bad. Now that CTSH is no longer in the picture, I'll be doing my homework tonight to see what trades we can enter this week!

CTSH

So this week has been a huge sell-off on the NASDAQ. This is where 95% of option traders fail. You have to be patience. I am currently down $1,200 on my trade which doesn't worry me. All indicators are indicating that the stock is still bullish. There are two additional factors that still make me believe that this stock will perform in our favor within 1-2 weeks.

1. During this sell off, this stock has sold off about $3.00 per share since it has hit its 52 week high meaning that it should make huge gains once it becomes bullish again.

2. CTSH has increased its target price to $92.00, in my experience when a target price has increased, the stock will perform in our favor.

Just be patient and watch how this stock performs :-)

**FREE**PICK**** CTSH APR11 70 CALL

Currently CTSH Apr11 70 Call is selling for $7.70; since each contract consists of 100 stock options your investment will be $770.00. I actually purchased 6 @ $7.80 so my investment is $4680.00. I'm confident that within the next few days, the bulls will be in our favor and hopefully have a minimum of a 20% return, but as always, if we start showing that the bears are going to take over any profit is better than none! :-)

What are stock options and why trade them?

Stock Options are contracts that allow the owners to buy or sell a stock at a specific price before it expires. There are two types of stock options; calls and puts.

For example, assuming XYZ company shares are trading at $40 right now. You bought a call stock options contract that allows you to buy XYZ shares at $40 anytime before it expires in 2 months. 1 month later, XYZ company shares are trading at $50 but you still own the right to buy it at $40 through the call stock options.

An example of a put options is, assuming you own XYZ company shares trading at $40 right now. You bought a put stock options contract that allows you to sell your XYZ shares at $40 anytime before it expires in 2 months. 1 month later, XYZ company shares are trading at $30 but you still own the right to sell it at $40 through the put stock options.

The beauty of trading stock options is the fact that you're able to control 100 positions for a small investment. For example, let's say we would like to purchase 100 shares from AMZN. AMZN is currently trading at $188.75 which means we would have to invest $18,875.00 to purchase those shares; now in order to make $100 that means that each share would have to increase by $1.00 in which stocks normally won't move that much within a day, however stocks like AMZN do have a high probability of making between $2-$4 moves per share within a day whether it be bullish or bearish.

Now let's talk about leverage with options. I started my account with $5,000 which would be an ideal start up, however I am currently trading for someone that could only begin with $1,000. So let's look at AMZN and use a $5,000 account in this example. Let's look at an option that is "in the money" which would be the April11 185 call at $14.01 per share. Stock options come in a contract size of 100 options per purchase which would mean that it will cost $1401.00 to control 100 options. Since we have $5,000 we can purchase 3 contracts which would mean 300 options for a total investment of $4,203.00. Since we now control 300 options, that means in order to make $100 the share would have to go up by .33 cents; considering a share like AMZN goes up by $2.50 in our favor when we make this purchase, you're looking at making approximately $750 return on your investment, not a bad pay day!

Now you see why it's beneficial to trade stock options, the leverage you have is priceless!

Some of my picks

So these are a few trades I made recently, not too bad. On the AGU and AMZN trade, I was not patient and ended up closing the position too early, however we learn from our mistakes! I had a few good trades like DE, MOS, and TRW. JOYG was a trade that I was able to make a small profit, so it wasn't a bad trade at all. When I trade, my goal is to minimize losses and trade whatever position has the highest probability to make a profit.

Right now the market is definitely bullish so as you can see, most of my trades will be calls. I expect that within about 9 months, my account will go from $5900 to about $10,000 which isn't a bad return on investment. For the next few months, I will just be giving you all free trades and upload pictures of my trades so you can keep up with what I am doing. Within about 10 months I will be offering to trade on accounts, e-mail picks, and mentor those who would like to learn to trade.

If you all have any questions, e-mail me at abelamorales@gmail.com