The Bull Hunters Guide

I released the original version of The Bullhunters Guide To The US Stock Market in December 2006. There were 1600 downloads within a matter of weeks. As of today, there have been 3770 downloads. The Bullhunters Guide has officially made Bronze status in the best seller stakes (just kidding. I’ve got no clue what that means)

I am officially over halfway through the new version of The Bullhunters Guide. This time it will include more indepth trading information about options, covered calls and more advanced strategies. Increasing your monthly cashflow by renting shares is one topic. I’m hoping this will shed more light on the US stock market for everyday people. Of course the strategies apply to most stock markets around the world. The bigger markets are just more suitable due to the liquidity of the stocks.

2007 has been kind to me. The Bulls have had a Run on the market and I haven’t needed to focus too much on Bearish Strategies. I will talk more about those strategies in the next book. Stay posted and I will keep you updated about the release date for the bigger and better version of The Bullhunters Guide To The US Stock Market – Due for release December 2007. Oh Yeah! It’s free too. Of course!

Go the Bulls!

Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 - 2007

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Funny thing… life. Just when you think you have it all together it comes up with another challenge. I am recovering from a bout of the flu which has kept me from my work here which is to help guide you through understanding the basics of the US stock market with the writings of Sean Rasmussen and his ebook.

I am meeting with Sean tomorrow evening to discuss what else but the Bullhunter, and I will needle him to find out where the next installment is to The Bullhunters Guide. Yes, he has flown from Perth to Melbourne to meet with his web designer and catch up with me too. It’s so good to make contact in person rather than emails and chats every now and again. Working on the web is so cool though as your office is wherever your laptop is.

So back to emotional intelligence…

Dictionary meaning of emotional :

actuated, effected, or determined by emotion rather than reason

Dictionary meaning of intelligence :

the faculty of understanding

Jamie McIntyre states in his seminars that the sign of intelligence is the ability to entertain a new idea.

If you are a trader already and have money in the stock market then you know how you react or respond when your trades don’t happen the way you want them to. It is just a matter of learning from your trades and not being attached to them. It is a good idea to have some money to donate so that when the market hasn’t gone your way, you know that the loss is not really a big deal and that you can make it back.

If you happen to react and start kicking and screaming and feeling sorry for yourself, then you have not learned the lesson. If this happens you can make some bad choices. Rather, if you respond and change the way you view the situation, you will do even better the next time.

If you are trading for cashflow, then you really have to have a plan in place. I am not here to advise you on your rules for trading as everyone eventually finds the way it works for them. It’s like learning anything new, you try a system and then tweak it to suit your personality.

So its a little like when you are in your car driving along… do you focus on the bugs on the windscreen or on your destination? If you let the little things in life get in the way and focus on the trades that didn’t go your way, that’s what you will keep on getting. Take charge of your emotional intelligence today and focus on your destination with a sense of certainty. You will be a whole lot happier on your journey

To Your Success

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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Hello fellow Bullhunters

Well I am getting my head around all of this and we are nearing the end of The Bullhunters Guide to the US Stock Market which I know you have all downloaded by now. This resource will help you in your endeavour to comprehend what the stock market is about. Today we discuss some more about Options Trading and the reasons why some traders buy calls. So here is the excerpt…


Options Trading

On the other side of things are people who buy options. Someone buys calls because they believe a stock is going to go up. Imagine you were convinced that Microsoft stock was going to have a $5 per share gain by Christmas, but you only had $3,500 to invest. At $28.37 per share you could only buy 123 shares. If the stock went up to $33.37 as you expect, you would only make $635 in profit. Instead, you could leverage your money by buying calls.

You go online and discover that there are several expiration dates for Microsoft options - October, November, January, April. There are even options for January and April of the following year, but thats too far in the future for your Christmas strategy. You decide to look at the January and April calls.

You see that the strike prices are available starting at a low of $15 and going to a high of $37.50. Since Microsoft’s stock price is $28.37, any strike price under that would be considered in-the-money and any strike price higher than that would be out-of-the-money. The Options Clearing Corporation determines what strike prices are available for each stocks trading volume and current price.

You think that Microsoft is going to go up at least $5 to $33.37 so you look at the strike prices near that level. You see that January $32.50 calls are selling for $0.10 ($10 per contract) and April $32.50 calls are selling for $0.30. With your $3,500 you could either buy 350 January contracts or 116 April contracts. Obviously the April contracts cost more because there is greater chance that Microsoft (or any stock) will go up (or down) the longer the duration of the contract.

You decide to go with 350 January contracts. This gives you the power to control 35,000 shares of Microsoft - nearly $100,000 worth - for only $3,500. If the stock fails to reach $32.50, your contracts will expire worthless and you will have lost your whole investment. If it reaches $32.60 or more, you are guaranteed to break even. But the good news is that you don’t need to exercise your option (which would require upwards of $99,000) - you can simply sell it.


Trading for Cashflow

As you can see from this summary of buying calls, it can be a great way for you to produce a monthly cashflow with this trading strategy. It’s all about leveraging your money to make it work for you. So you could choose to make the small profit if the stocks go up or you can mulitply it to give you an even bigger return by buying calls.

This strategy is more advanced and to attempt it you need to be at least comfortable with writing covered calls and have your trading system and emotional intelligence in place to be able to deal with the outcomes of your trades. It is not for a beginner and you can build up to this slowly and gain confidence with every step you take in educating yourself.

Some of the graduates of the Jamie McIntyre homestudy have been very successful in learning how to rent shares (in Jamie speak) and have progressed to this strategy by learning how to cover themselves if things don’t go their way and the market happens to drop. Education for Life is the what Jamie teaches in learning how to become financially free and setting your own goals on how to achieve this.

To Your Success

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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I am going straight into another excerpt from The Bullhunters Guide to the US Stock Market today discussing the renting shares or more commonly known as the Covered Calls strategy.


Covered Calls - Renting Shares

Say your Grandma left you 10,000 shares of Microsoft. You held it for a few years and the stock basically did nothing. Microsoft doesn’t pay a very good dividend so you consider selling some of the stock to get some cash. But instead your broker recommends that you write covered calls. You say… What…

By writing a call you are selling an option on your stock. An option gives its owner the right, but not the obligation, to take action. In the case of calls, it gives the holder of an option contract the right to buy 100 shares of Microsoft at $30.00 per share any time between now and November.

Just as with stocks, you don’t really sell an option contract directly to another investor, but instead to a market or specialist. He then sells the contracts to individual investors who want them. Of course there is a spread between the bid and ask of an options contract as well.

Keeping with the Microsoft example, you could sell the contract mentioned above with a strike price of $30, expiration in November for $0.05 a share. Since each contract is for 100 shares, this would equal $5. That’s not a lot of money so you decide to sell 100 contracts, which covers all $10,000 of your shares (100 contracts*100 shares each). In this case you get $500 no matter what. Microsoft’s current stock price is $28.37 but if it reaches $30 or more, your contracts will probably be exercised. This means that you will be obligated to sell all 10,000 shares for $30 each - even if they reach $35, $50 or $100 per share. If instead the stock stays around $28.37, goes down or goes up but not to $30, the options you sold will go unexercised. In this case, you will keep the $500 and all of your shares.

When you write calls for which you own the underlying stock, they are said to be covered calls. In this example you owned 10,000 shares of Microsoft so you could write 100 covered call contracts. If the contracts were exercised, you had the stock to sell.

A more aggressive (and very dangerous) strategy is writing naked calls which is when you sell contracts for the stocks that you don’t have. If the contracts get exercised, it’s up to you to go out in the open market and buy the stock.


Trading for Cashflow

In the above excerpt, remember that Sean wrote the eBook last year so the prices and months that he mentions is because of this reason. This is only a brief summary of the renting shares strategy and it is a great one to use when you are trading for cashflow. Remember that with any new strategy that you take on , it is wise to paper trade for a minimum of three months until you get the hang of how it all works.

Many of you requested that Sean put some real live renting share trades in his next eBook as you are eager to learn the strategy. This Sharelord® strategy will be discussed in more detail in the next installment to the Bullhunters Guide. I trust that the articles here are of use for you in your endeavour to master the US stock market.

To Your Success

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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Hello fellow Bulhunters

Looking back at the last post, I sincerely hope that you have sorted out the Fundamental Analysis and the Technical Analysis and know how to use both to your advantage. Reading charts is something I love to do and when the various patterns show up, looking for entry and exit points can be fun when you know what to look for. Of course trading is a lot more than just looking at charts so today we will be discussing an advanced strategy known as going short or shorting a stock. More from the Bullhunters Guide eBook…


Going Short - The Napoleon Dynamite Example

When you own a stock, you are said to be long it. The owner of 100 shares of Wal-Mart would be long 100 WMT. When you sell a stock you own, you cancel out your position. You are no longer 100 WMT nor are you short of any shares. But did you know that you can actually sell a stock that you do not own.

Imagine your friend got an autographed picture of John Heder who is the star of Napoleon Dynamite, right after the movie was released on DVD. A few days later you noticed that Heder’s autograph was selling for $500 on eBay. You ask your friend if you can borrow it for a while and he says yes. So you take Heder’s autograph and sell it online for $500.

Six months later Heder has faded back into obscurity. Your friend asks you if he can have his autograph back and you say sure. You go online and see that eBay is flooded with Heder autographs and you buy one for $10. As soon as you receive it in the mail you return it to your friend. He doesn’t even know that you made $490 in the process.

In Wall Street gibberish, you shorted the John Heder autograph. Instead of the old adage, buy low, sell high, you sold high and then bought low. You can do this with stocks and the good news is that you don’t even have to ask permission.


Great Trading Strategy

Well who would have thought. Thanks Sean for bringing this to our attention. How many of you out there even knew this existed. It is another way to bring in some cashflow although it may take some time to actually see the cash depending on how volatile the stock is.

We are powering through The Bullhunters Guide to the US Stock Market and next we will look at an introduction to trading options. That’s right renting shares will be the topic of my next article so stay tuned and subscribe to the feed so you don’t miss out on any of these strategies.

To Your Success

Angela Recchia
Graduate Support
Universal Wealth Creation © 2004 - 2007

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