This stock may be getting ready to fly.

Posted on by The INO.com Team

This stock may be getting ready to fly.

I was looking through our alerts recently and this stock just jumped out at me. I want to share my thoughts about what I expect will happen to this market in this short video. We've discussed this pattern before on several other videos and all have worked out very successfully.

There's never a guarantee in trading and you should not look upon this as a slam dunk. However, all the odds favor this that this stock maybe on the runway and ready to take off in a positive direction.

Take a quick look at this short video and see what you think. I think you'll be impressed at the pattern and the possibilities that this market has on the upside.

The video is available right now and there is no charge or registration.

Enjoy,

Adam Hewison
President, INO.com™

Co-creator, MarketClub.com™

Traders Toolbox: Spread It On

Posted on by lindsay

Spreads sometimes are touted as a no- or low-risk trading option, ideally suited to smaller or more risk-averse traders. Although some do have limited risk in certain circumstances, spreads are by no means risk free, and in fact they contain some unique risks, especially for traders who don't have a clear understanding of the limitations and possibilities of these transactions.

In options markets, the term spreads covers everything from simple time spreads to complex butterflies, boxes and conversions. Although futures spreads are, at least on the surface, more straightforward than many of their options counterparts, understand the basic price relationship between different futures contracts as well as the function off spread trading is integral to a well-informed market perspective.

In the most basic sense, a spread refers to the price difference between two or more trading instruments, whether they are two contact months of the same commodity, two different commodities or the cash and futures price of a particular commodity. (The cash/futures spread is commonly called basis.)

When putting on a spread, a trader establishes a long position in one month or contract while simultaneously establishing a short position in another month or contract. For example, a trader might buy September bonds and sell June bonds, or buy October cattle and sell October hogs. In putting on a spread, the trader seeks to profit from an increase or decrease in the price difference between the two contracts (legs) of the spread, rather than outright price movement of the commodities involved.

Spread orders commonly are placed and executed at the price difference (differential) rather than at the

individual prices of each leg. An exception may occur when a trader deliberately buys or sells one leg of the spread outright, and then waits to complete the other half of the spread, usually to secure a better spread differential. This process, called legging, can be very risky.

When buying the spread, the trader expects the spread differential to increase; when selling, he expects it to decrease.

Reduction - Spreads can reduce risk and offer expanded trading opportunities for two main reasons. First, because a spread contains both a long and short position in the same or related contracts, losses on one leg of the spread are countered by gains on the other. This will limit profit as well, but for many traders, this is an acceptable compromise. Second, by virtue of this reduce risk, some spreads also will have the added advantage of lower margins, often significantly lower than the margin an an outright positions. This offers

the options of putting on a greater number of spread positions, but will, of course, increase exposure.

Two questions naturally arise about spreads: Why do price differences occur, and how do traders profit on spreads if losses are offset by gains in different legs?

Spreads occur between different months of the same contract for a variety of reasons. For many agricultural contract, the cost of storing and insuring the physical commodity from month to month (referred to as carrying cost) is incorporated into the price of the back months in relation to the nearby month or the cash price, and will account for at least a minimum price difference between two contracts.

Changes in the supply and demand picture from month to month, as well as basic uncertainty about the future, will contribute to a fluctuating spread. Seasonal differences, such as the change from an old crop year to a new one, also influence the spread. For financial contracts, changing interest rates, the relationship between short-term and long-term interest rates, and currency rates also will affect the value of contracts form moth to month and account for a widening or shrinking of the spread. The same commodities on different exchanges can differ for locally specific economic reasons, like the varying transportation and carrying costs in the different markets.

Intense market volatility and confusion, such as often occurs during rollover periods (when the front month of a commodity is nearing expiration and many positions are reestablished in the next nearby month), also will create spread opportunities. Traders commonly will put on spreads to roll positions into the next month, A long June S&P could be rolled over by selling the June - September spread, that is, selling the June contract and buying the September. In every market, speculators and hedgers will have a fundamental knowledge of the factors affecting the spread, and will sense when prices are out of line.

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October Trader's Blog Contest Winner

Posted on by lindsay

There were 79 eligible entries for the October Trader's Blog Contest. Thank you for everyone who participated. I think that sharing your views of the market and certain specific aspects are a great help for all traders.

The lucky winner of 6 seminars from our INO TV digital library was comment number 66, Ray from the United States who said, "I like the candlestick formation and what they can tell me about the buyers and sellers as well as whether we are in an oversold area or not."

Congrats Ray, your discs will be shipped out today. Don't forget to enter our November Trader's Blog Contest sponsored by INO TV, where the question is, "What is your worst broker experience, if any?"

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Best,

The INO TV Team

This may make you feel better.

Posted on by The INO.com Team

From our media partner: The Associated Press.

CEOs, famous investors hit hard by market plunge

By RACHEL BECK
AP Business Writer

(AP:NEW YORK) Here's something that might provide a bit of solace amid the plunging values in your retirement accounts: Warren Buffett is losing lots of money, too. So are Kirk Kerkorian, Carl Icahn and Sumner Redstone.

They are still plenty rich, but their losses _ some on paper and others actually realized _ illustrate how few have been spared in today's punishing market when even big-name investors, corporate executives and hedge-fund titans are all watching their wealth evaporate.

The portfolio damage for some of these high-flyers has soared to billions of dollars in recent months. And they can't just blame the market's downdraft _ some did themselves in with badly timed stock purchases or margin calls on shares bought with loans.

"It's always hard to beat the market no matter who you are," said Robert Hansen, senior associate dean at Dartmouth's Tuck School of Business. "But when the ocean waters get that rough, it is hard for any boat to avoid getting swamped."

It has been a painful year for anyone exposed to the stock market. The Standard & Poor's 500 stock index, considered a barometer for the broad market, has lost about 36 percent since January, with every single sector _ including once thriving energy and utilities _ seeing declines of about 20 percent or more.

Such losses in the last year have wiped out an estimated $2 trillion in equity value from 401(k) and individual retirement accounts, nearly half the holdings in those plans, according to new findings by the Center for Retirement Research at Boston College. Similar losses are seen in the portfolios of private and public pension plans, which have lost $1.9 trillion, the researchers found.

As stocks have plunged, so have the value of chief executives' equity stakes in their own companies. The average year-to-date decline is 49 percent for the corporate stock holdings of CEOs at 175 large U.S. companies, according to new research by compensation consulting firm Steven Hall & Partners.

Topping that list is Buffett, who has seen the value of equity in his company, Berkshire Hathaway, fall by about $13.6 billion, or 22 percent, so far this year, to leave his holdings valued at $48.1 billion. Oracle founder and CEO Larry Ellison has seen his equity stake fall by $6.2 billion, or about 24 percent, to $20.1 billion, according to the research that ran from the start of the year through the close of trading Oct. 29.

Rounding out the top five in that study were Microsoft's Steve Ballmer, whose company equity fell by $5.1 billion to $9.4 billion; Amazon.com's Jeff Bezos, whose equity fell by $3.6 billion to $5.7 billion; and News Corp.'s Rupert Murdoch, with a $4 billion contraction to $3 billion.

News Corp. and Microsoft declined comment, while representatives from Berkshire Hathaway, Oracle and Amazon.com didn't respond to requests for comment.

Those results included the value of the CEOs' stock, exercisable and non-exercisable stock options and shares that haven't yet vested. They are drawn from each company's most recent proxy statement, which means they might not include subsequent stock purchases or sales.

"Everyone wants to see executives have skin in the game, and this shows they certainly do," said Steven Hall, a founder and managing director of the compensation consulting firm. "But in the end, we have to remember they still have billions to fall back on."

But there have been recent instances where executives' large equity positions have blown up _ not only damaging a particular CEO's portfolio but the company's shareholders, too.

A growing number of executives at companies including Boston Scientific, XTO Energy Corp. and Williams Sonoma Inc. have been forced to sell stakes in their companies to cover stock loans to banks and brokers. The company stock was used as collateral for those loans. The falling prices triggered what is known as a "margin call."

"A decrease in insider ownership is bad for corporate governance," said Ben Silverman, director of research at the research firm InsiderScore.com. "Then executives' interests are less aligned with their shareholders."

Investors in Chesapeake Energy Corp. were recently faced with the surprising news that company CEO Aubrey McClendon was forced to sell almost 95 percent of his holdings _ representing more than a 5 percent stake in the natural gas giant _ to meet a margin call. His firesale of more than 31 million shares, valued at nearly $570 million, put downward pressure on Chesapeake's stock in the days surrounding the mid-October transaction.

McClendon has called this a personal matter and said he would rebuild the ownership position, according to Chesapeake spokesman Tom Price.

Redstone, the famed 85-year-old chairman and controlling shareholder of CBS Corp. and Viacom Inc., was forced to sell $233 million worth of nonvoting shares in those companies. That was done to satisfy National Amusements' loan covenants, which had been violated when the value of its CBS and Viacom shares fell below required levels in the loan agreements.

National Amusements is Redstone's family holding company, and the stock sales represented 20 percent of the holding company's CBS shares and 10 percent of its Viacom shares. A spokesman for National Amusements declined to comment.

Certainly some of the biggest investors aren't happy with recent market events.

Earlier this year, billionaire Kerkorian's investment firm Tracinda Corp. paid about $1 billion, at an average share price of near $7.10, for about 141 million shares in Ford Motor Corp. That represented a 6.49 percent stake in Ford.

Those shares have tumbled as the automaker's financial condition weakened considerably amid slumping sales and tighter credit conditions. That drove Tracinda to disclose twice in recent weeks that it was selling some of its Ford stock _ one batch of 7.3 million shares sold at an average price of $2.43 each, and the other for 26.4 million shares at an average sale price of $2.01 each. That means for about a quarter of his total Ford holdings, he got $71 million.

Tracinda spokeswoman Winnie Lerner declined to comment.

Activist investor Icahn faces an equally ugly situation with his investment in Yahoo Inc. earlier this year, when he bought about 69 million shares for a nearly 5 percent ownership stake. As of June 30, those shares were valued at about $20.60 each, according to a regulatory filing.

Over the summer, he fought hard to get Yahoo's board to agree to a takeover by Microsoft Corp., a deal that never went through. As a concession, Icahn got a seat on the Yahoo board for himself and two allies.

But his Yahoo holdings are off sharply, with the company's shares trading around $13 each. That means he's down more than $500 million since late June. Icahn didn't respond to a request for comment.

As Tuck's Hansen notes, the current market conditions are serving up a reality check _ not just for individual investors but for the biggest names around.

"Fishing isn't called catching, and investing isn't just called making money," Hansen said. "We have to remember that things can go down by a lot."

Copyright 2008 The Associated Press.

Trader Toolbox: Learning Options Part 1 of 5

Posted on by lindsay

Options on futures have come of age. In fact, at some exchanges, options trading outstrips growth in futures trading by a 2:1 margin. But this growth has a major flaw: Many people use options for the wrong reasons. Sound options trading begins with understanding basic concepts and dispelling common misconceptions about he potential benefits and limitations of these instruments.

The Basics - An option contract gives you the right to buy or sell something at a set price for a limited amount of time or at a specific future date. Options are common in many businesses, such as real estate, where an investor might purchase an option that will give him the right to buy a parcel of land at an agreed upon price for a six-month period, regardless of fluctuations in the market price of the land.

Options on futures are no different. A trader can buy an option in June allowing him to buy December T-bond futures at 100.00, even if the market price in December is 105,00. The buyer pays a price for this opportunity, called the premium. The option buyer is sometimes called the writer.

There are two kinds of options: calls and puts. A call option gives the owner the right to buy futures at a specific price; a put option gives the owner the right to sell futures at the specific price. This predetermined price is called the exercise price, or strike price. A call option owner who "exercises" his right becomes long futures, while an option seller is "assigned" a short futures position. When a trader sells an option, he risks having a losing futures position at any time. In return for assuming this risk, he receives the option premium.

The owner, on the other hand, is under no obligation to exercise, and may sell the option or hold it through the term of the agreement. The last day a buyer can exercise an option is called the expiration date, which is established by the exchange. For example, the owner of a March 445 S&P call call buy March S&P futures at 445.00 until March 17, if he so chooses. The option expires at the end of trading on this day.

Most listed options in the United States are American style options, which allow the holder to exercise any time up through expiration day. European style options can be exercised on expiration day only.

Ins and Outs - The strike price of an option can be described three ways:

In-The-Money refers to calls with strikes prices below the current market price of the underlying future and puts with strike prices above the market price. If coffee futures are trading at 195.00. a 194.00 call is in-the-money, as is a 196.00 put.

At-The-Money options are calls and puts with strike prices equal to the current futures price. If coffee is 197.00, both 197.00 coffee calls and puts are at-the-money.

Out-Of-The-Money refers to calls with strike prices above the current futures price, and puts with strike prices below the future price. With coffee at 194.00, a 195.00 call and a 193.00 put would both be out-of-the-money.

With March bonds at 100.22, the owner of a March 98.00 call could exercise his option, become long bond futures at 98.00, sell the futures at 98.00, sell the futures and make 2.22. If the trader paid less than 2.22 for the opions, he would make a profit on the trade.

Because option buyers are not required to exercise, their market exposure is limited to the premium paid for the option. For sellers, however, risk is equivalent to an outright futures contract, because they can be assigned a futures position at any time.