Candlestick Trading Forum
keyword search

Candlestick Trading Forum        

Purchase Stock

Purchase Stock Options

When you purchase stock you are buying partial ownership in a company. Stock options deal with options contracts in which the owner of the stock has the right but not the obligation to buy or sell the stock or other financial instruments of choice. The value of that stock option is based on the underlying value of the stock.

There are two types of stock options available to the investor when he or she decides to buy stock options. Call options gives the investor the right, but not the obligation to purchase 100 shares of the underlying stock at a certain price per share. This price per shares is known as the strike stock price and the stock must be purchased on or before the date of expiration. When options investing, the call option is used when the price of the underlying stock is expected to appreciate.
Put options gives the investor the right but not the obligation to sell 100 shares of the underlying stock at a certain price per share on or before the expiration date. When trading options, they are commonly used when the stock price of the underlying stock is expected to depreciate. It is important to understand the difference between call and put options and you will learn more about it through your options trading education.

Many people consider options trading to be a risky way to invest. When you purchase stock options, it is risky however there is always an investment risk when investing money in any type of financial instrument. Investors must be sure that they fully understand and have committed to learning as much as they can about any investment endeavor that they pursue. Below we list some benefits of trading stock options.

Leverage With options you can control more assets with less money. One single options contract controls 100 shares and with the fraction of the cost that would normally be paid for the same number of shares. Basically, the options markets provide the ability to do more with less effort.

Profit Opportunities The opportunity to profit when trading options is available when a stock goes down in price, increases in price and even when the stock goes sideways. It just depends on the options strategies used.

Big Profits Profits can potentially be very large when you purchase stock using stock options. Options are extremely sensitive to the stock price movements and the cost for buying options is relatively low.

Continue to research stock option trading to see if it is a good fit for you.

Market Direction: Trend analysis becomes much more predictable when using the right tools. Each individual candlestick signal illustrates the conditions of investor sentiment. There are indecisive signals, there are decisive signals. Each have a valuable result when analyzing what the current trends are illustrating. The Dow has been in a very slow sideways uptrend since the first of August. Mid-August experienced a breach of the tee line. Immediately after that breach, it became evident the Bulls were stepping right back again. The same has occurred over the past few days. The past two days of trading have demonstrated there is not forceful selling occurring after the big profit taking day.

The past two indecisive trading days now allow for the possibility of the same price pattern witnessed in mid August. A positive trading day tomorrow would bring us back up close to the tee line. Where as the tee line usually acts as support or resistance, it may be having a different responsibility during the sideways market. The slow uptrend may be the predominant factor with the tee line acting as a midpoint. The market is not want to get too far above the tee line or too far below the tee line. The results of this observation  will be greatly evidenced in how the market performs tomorrow. This does not do much for projecting what the market is going to do, but it does provide an analytical platform that makes for easier trading decisions.


If the markets continue to show bullish strength tomorrow, the probabilities become much greater that the slow uptrend channel remains in progress. This allows for the immediate closing out of short positions and adding long positions without major hesitation. Conversely, if the market sells off hard tomorrow, that would be more evidence the downtrend is in progress, and will remain so until it can close above the tee line. This does not do much for helping investors project which direction the market might go from here, but it definitely allows an investor to be prepared to take action based upon how the market performs from this level.

Currently, the portfolio recommendations are a mixture of long and short positioning. The benefit of candlestick signals is that it allows for accurate analysis of which stocks are going up and which are going down. There are market conditions where money can be made with both long and short positions in the portfolio at the same time. This is a beneficial investment method for taking advantage of a sideways moving market as well as being protected from a dramatic move one way or the other.

Sideways moving markets lack the dramatic change of investor sentiment. That allows for chart patterns and signals to work effectively with out the influence of investor sentiment move in the market in one direction or the other. There are signals in price setups that are going to work effectively whether the market is moving up or sideways. As illustrated in our recent recommendation of AMKR, the perfect buy signal predicted a strong price move to the upside whether the market was moving up or not. A Bullish Engulfing Signal/Inverted Hammer,  following a Spinning Top, right on the 50 day moving average, confirmed with a gap up in price  the next day was an illustration of an extremely high probability high profit price move.


The larger picture demonstrated a wave 123 price pattern. A bullish strength of the past few days was clearly evident based upon a signal set-up that has worked very affectively for centuries. You do not have to be an expert analyst. You do not have to spend hours upon hours of researching which stocks/sector might have good future opportunities. The candlestick signals and patterns graphically demonstrate the decisions of all those that have analyzed each stock/sector and have made a buy or sell decision based upon their research. Candlestick analysis merely takes advantage of all the research available and puts it into a clear graphic depiction.

Public Stock Chat tonight at 8PM ET. Click here for instructions.

Good investing,

The Candlestick Forum Team

This Week's Special - Save 50%!

Options Trading with Stephen Bigalow

2-Day Training Webinar - September 26 & 27, 2009

Early Bird Discount - Register Now

Quick Start Training Package - 45% OFF
The Major Signals Educational Package - 45% OFF
2-Day Training Seminar on CD - 40% OFF


Candlestick Trading Forum