Trading Consumer Goods Stocks


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Trading Consumer Goods Stocks

In trading European style options, an options contract can only be exercised on expiration of the options contract. When trading exchange-traded options in the USA, standardized stock options contracts typically consist of one hundred shares of the stock. Contract lengths are standardized. Although European style stock options can only be exercised at expiration, unlike American style options, one can exit a European style stock options contract at any time during the contract period. Thus a stock options trader can execute the opposite to trade and pocket his profits or limit his losses without waiting until the end of the contract period. The difference in execution of options trades between European style stock options and American style stock options can be significant for stock investors.
Buying Calls with European Style Stock Options
A call gives the purchaser the right to purchase the underlying stock at a set price as defined by the contract. This price is called the strike price. In the case of European style stock options this can only happen at the end of the contract term. With an American style options contract the purchaser can execute the contract at the most opportune time during the contract period. An issue arises here for an investor who expects to be able to use a call option to take advantage of an expected rise in a stock price. If the stock price moves up rapidly the investor may choose to execute the contract and buy the stock. He wants to keep the stock but is concerned about a reversal. As such he can buy puts on the stock to protect his gains while still holding the stock. This is not possible in trading European style stock options as one cannot execute the contract and take the stock prior to expiration. The only way to guarantee a profit when the options contract price rises is to exit the contract and take a profit but not hold the stock. This may be limiting for a number of stock options trading strategies.

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Trading Consumer Goods Stocks

  1. 1. Trading Consumer Goods Stocks By
  2. 2. Trading consumer goods stocks often requires a different approach thantrading more volatile stocks. Trading consumer goods stocks often has to do with timing. goods-stocks
  3. 3. Here we are not talking so much about day trading and following technical analysis signals but goods-stocks
  4. 4. developing a sound appreciation of thefundamentals that drive prices and trading ofconsumer goods stocks. goods-stocks
  5. 5. The overall economy is a major factor for price fluctuations whentrading consumer goods stocks. goods-stocks
  6. 6. In general, Proctor &Gamble, Clorox, and otherUS based consumer goodsstocks do not rise and fall in multiples due to their general stability. goods-stocks
  7. 7. People keep buying dishsoap, laundry soap, and bleach even during a recession. They don’t buy any more when times get better. goods-stocks
  8. 8. However, when a recession hits, the relative value ofconsumer goods stocksrises because the valueof virtually every other stock falls. goods-stocks
  9. 9. Thus trading consumer goods stocks on theverge of a recession or on the verge of a recovery can be profitable. goods-stocks
  10. 10. Even though these stocksmay fall due to reduced salesof some products they tend to be the safest port in astorm when a recession hitsand don’t fall as far as other stocks. goods-stocks
  11. 11. Whom Are We Talking About? goods-stocks
  12. 12. Here is a short list to consult for tradingconsumer goods stocks.• PROCTER & GAMBLE CO• PHILIP MORRIS INTERNATIONAL• COCA-COLA CO• PEPSICO INC• ALTRIA GROUP INC• COLGATE-PALMOLIVE CO• CLOROX goods-stocks
  13. 13. These are all well-known companies with lots of availableinformation to help you determine intrinsic stock value and margin of safety. goods-stocks
  14. 14. When trading consumergoods stocks like these, goods-stocks
  15. 15. your concern will be significant market movements instead of the sort of small up and downfluctuations that one uses for scalping in day trading. goods-stocks
  16. 16. Although profitablemarket movement mayoccur within the span ofa single day the setup to profit goods-stocks
  17. 17. from trading consumer goods stocks willcommonly be longer as it requires that youlearn about a stock and what drives its price. goods-stocks
  18. 18. How trades fail intrading consumer goods stocks is when the trader does not stay current with the fundamentals. goods-stocks
  19. 19. Options in TradingConsumer Goods Stocks goods-stocks
  20. 20. Buying stock options onconsumer goods stocks helps limit risk and offers a means ofleveraging your trading capital. goods-stocks
  21. 21. When trading consumer goods stocks one often assesses thefundamentals that drive stock price and assess the state of the economy. goods-stocks
  22. 22. The rational is that isthe economy is going to get better the price of the stock may fall a bit as investors rush to profit from faster growth. goods-stocks
  23. 23. If the economy is going to falter the price of a consumer goods stockmay rise as investor flee poor investments and seek shelter in consumer stocks. goods-stocks
  24. 24. Thus trading consumerstocks is often a meansof trading in a directioncontrary to that of the US economy. goods-stocks
  25. 25. Because the timing of amarket decline may not be certain, goods-stocks
  26. 26. it is often safer andmore profitable to buy calls or puts on a consumer stock and execute when themarket change occurs. goods-stocks
  27. 27. A call allows a trader topurchase a stock at a set price no matter how high it might rise and aput allows him or her to sell no matter how low a price drops. goods-stocks
  28. 28. As such tradingconsumer goods stocks with options can be profitable in both market directions. goods-stocks