Educational Programming Video
The Value Line Daily Option Survey
Program 1: Introduction
The first program in our series will introduce you to stock options and to The Value Line Daily Options Survey, which offers daily evaluations of over 12,000 options at our website www.valueline.com.
Did you know that options trade on more than 2,500 stocks, most of which we cover at Value Line? Value Line has been in the business of evaluating stocks for over 60 years and evaluating options for over 20 years.
What are options and why should I be interested in them? An option is a contract that gives you the right but not the obligation to buy (in the case of a call) or sell (in the case of a put) stock at a specified price until a specified date. Listed stock options have been around since 1973, but their growth has really taken off over the past nine years thanks to regulatory changes and to advances in communications technology, which have made the market a lot more competitive and efficient than it was before.
Should you, the investor, trade options? Whatever your investment needs, we believe that options have a place in your overall plan. That is because options offer you leverage and flexibility that you cannot get with stocks, bonds and funds alone. Options also give you the tools to reduce the risk of your portfolio and to significantly boost your income.
How can The Value Line Daily Options Survey help me with my option trades? Every day, our computer model selects the 12,000 most liquid options, evaluates them and scores them from 1 to 5 for relative performance. We make these evaluations available each morning at our Web site www.valueline.com, highlighting our top pick for each of the major strategies in easy-to-follow format. We also provide investors with ongoing advice in the Weekly Option Strategist, our online options newsletter and with an archive that includes our past reports. New subscribers also receive our book, How to Invest Using Options, which we wrote to explain options investing from A to Z.
Does our system work? We have clear evidence that our system works. For over 20 years, we have been keeping a track record of how our option recommendations have performed. Results vary from period to period, but over time, the track record clearly shows that a well thought-out program of options can both boost your returns and reduce your exposure to market fluctuations.
What are we going to cover in this series? We are going to start with the basics and take you through to some advanced topics. By the end of this series, we believe that you will be ready to commence an option investment program.
Our first session will be on why you should buy calls and puts. Our track record shows that buying recommended options has paid off handsomely over the past 10 years.
We will have a session on what drives option premiums. You will find that it is not bullishness nor bearishness, but volatility that drives option premiums. Find out how to use these dynamics to your advantage.
Another topic that we will cover is writing options as well as buying them. We will explore the profit, risk and margin considerations of this little understood strategy.
We will also introduce you to covered call writing. If you own highly ranked Value Line stocks, should you be writing calls against them? You will see that there can be a synergy between strong stocks and covered calls that can lead to very solid results.
Next, we will explore how you the investor can chose the right option strategy mix. We will show you how to define your objectives. We will also show you how to use The Value Line Daily Options Survey to build an options portfolio and how to use our spreadsheet software to monitor and evaluate an option trade.
Finally, we will introduce you to some advanced topics. What does Delta and Theta mean? These mathematical terms are quite useful and not that difficult to understand. We will also introduce you to option spreads, which often require relatively little capital and have commensurately lower risk.
That in a nutshell is what this series is going to be about.
Our next Options session will be on call and put buying.