Let's suppose you own a stock that was trading at $23.80 per share and someone offered you $2.60 a share to buy it at $25.00 within the next month. Would you take the offer?

Off the top of my head, it sounds like a pretty good deal to me. But there are several things I would have to consider before accepting it. First, I'd have to decide whether the stock's price would be more likely to go up or down during the offer period. If I thought it would go above $27.60 per share and stay there, I'd reject the offer and keep the stock. If I thought it was likely to go down and stay below $21.20 for a long time, I'd reject the offer and sell the stock. If, however, I thought that the stock's price would stay between $21.20 and $27.60, I'd take the offer. It would be a nice way to generate some cash while the stock's price didn't do very much. So how would I go about making these assessments?

First, I would look at VectorVest's Market Timing Graph to see what the market was doing. Right now it appears that the rally is stalling, so I would conclude that the chances of my stock soaring higher have lessened a bit. Next, I would check the stock's Relative Timing, RT, indicator. If RT were above 1.00, the stock's price would be in an uptrend. If RT were below 1.00, the stock's price would be in a downtrend. This information would definitely affect my analysis.

Then I would use VectorVest's Option Pricing Model to see if the offer of $2.60 per share were fair. I could also see whether it would even be worth considering the offer. Finally, I could get an idea of the probability of my stock closing above $25.00 a share a month from now. If I wanted to see the probability of this stock's price staying between $21.20 and $27.60 per share, I would use VectorVest's Options Analyzer.

To be honest, nobody has actually offered to pay me $2.60 a share to buy my $23.80 stock at $25.00 within the next month. But I know I can cause this to happen by selling September 25th Calls against it @ $2.60 per share. I would then have a "Covered Call" position and it would yield a juicy 157.71% annualized rate of return if the stock closed at or above $25.00 per share at expiration.

If you're interested in finding trades such as this, you would definitely want to use VectorVest's Options Rate of Return tool. It's a marvelous tool and, unfortunately, we don't talk about it often enough. Frankly, we don't talk often enough about any of the VectorVest Option Tools.

I have been invited to teach a one-day Options Course at The Forex & Options Expo to be held at Ceasars Palace in Las Vegas, August 2-4, 2009.

I was delighted to accept the invitation because I love Las Vegas and I love to teach Options. I am also looking forward to this event because it will present a special opportunity for VectorVest subscribers. Not only will Don Payton, our options Wizard, and I be giving the course, but it's being offered at the Special Low Price of $495.00 per person. Never before have we offered this course for less than $795.00 per person, and you can sign up at the very special low price of $445.00 per person if ordered before July 9, 2009.

The course was named, "Winning Big with Directional Option Trades," because VectorVest is virtually alone in teaching direction rather than volatility as the primary consideration in selecting the best option trades. We do not ignore volatility, of course, but our system of Timing the Market along with our vast array of Bullish and Bearish Strategies greatly increase your chances of placing the right trades at the right time.


Don't be afraid to sign-up for this course even if you have never traded options before. We will start out with the basics; then move on to more sophisticated trades. You will be able to understand everything we say and do. In fact, VectorVest will guarantee your satisfaction. Moreover, we will be offering our comprehensive Options Course CD Set and Options Analyzer at very favorable prices. The CD Set and Options Analyzer will allow you to understand virtually any options trade you can imagine. Finally, each attendee will receive a CD having many of our best "Strategy of the Week" presentations involving Options.

Put it all together and you're looking at the deal of a lifetime. Come join us at The Forex & Options Expo in Las Vegas.

VECTORVEST USER GROUP INFO CENTER.
No more excuses. You can no longer use the excuse that you didn't receive an email notification of the next VectorVest User Group Meeting in your area. Now you are able to get this information directly from VectorVest.

Simply access the User Group Section of VectorVest Views on the most recent Friday, or Thursday if the market was closed on Friday, and click on the link of your choice. All the information you need will pop up before your eyes.

In looking at a number of the notices, I was impressed by the variety of presentations and discussion topics being covered. If I were a User Group Leader, I'd sample some of these notices for ideas. Perhaps we are seeing the birth of a VectorVest User Group Info Center.

Our Market Timing System gave a C/Up signal yesterday and we said that, "Prudent Investors should consider buying top ranked stocks from the Easy Does It - C/Up strategy located in the Yellow Brick Road folder in the UniSearch Tool." What is that all about?

As noted in my essay of October 3, 2008, "The Yellow Brick Road" is a trading system which allows investors to make money in both up and down markets. It is easy to use, does not demand a lot of time and can be done at night when the market is closed. The Yellow Brick Road uses two strategies: "Easy Does It - C/Up" for going long on Confirmed Up signals and "Easy Does It - C/Dn" for going short, if one wishes, on Confirmed Dn signals. These strategies were illustrated on September 26, 2008 and October 3, 2008. An excellent "Strategy of the Week" presentation, showing the complete "Yellow Brick Road" process, was made by Ms. Angel Clark at the VectorVest University on October 3, 2008.

With all the economic and political turmoil going on around the world, it will be a fitting test to see if we have the brains, heart and courage to achieve financial freedom via The Yellow Brick Road.

HOPE VS REALITY.
I had a long conversation this morning with a Wall Street Journal Reporter regarding our Confirmed Up signal. He, of course, is acutely aware of all the problems currently facing investors and wanted to know what would support a "sustained rally" as indicated by the Confirmed Up signal.

I told him essentially what I said in last week's essay: Investors want hope and President-Elect Obama will give it to them. Mr. Obama has been carefully laying the ground work for his presidency with his comments on the severity of the recession, the huge amounts of money he needs to spend and the long time it will take to get the economy going again. While he admits he doesn't know for sure that his remedies will work, he exudes confidence in what he is doing. Great leaders know what to do and how to do it. So far, we are only learning about what Mr. Obama plans to do.

Nevertheless, investors are going to focus on the potentially profitable opportunities arising from Mr. Obama's programs then they will look beyond the dreadful economic news we're getting every day. This should give the market a lift at least to inauguration day. It's like the old game of buying the rumor and selling the news. Except this time it's Hope vs. Reality.

WHY YOU SHOULD LEARN TO TRADE OPTIONS.
A long-term subscriber at our Tampa Seminar told me that Rambus, RMBS, was in another patent suit and the results of the trial were imminent. The decision could move the stock price up or down, big time. I asked if he was buying a Straddle. A Straddle is an Option trade that allows you to make money whether the price of the stock goes up or down...the more it rises or falls, the better.

This isn't the first time we have encountered an opportunity such as this with Rambus. On February 20, 2004, I wrote an essay regarding an earlier Rambus court decision called the "The Perfect Straddle." This essay described how Straddles work and an associated "Strategy of the Week" presentation showed how one could have made $6,290 in two days on very little investment.

Today is déjà vu all over again. Rambus closed down $7.26 per share on a ruling against them. Making money like this is Why You Should Learn To Trade Options.

We missed a great buying opportunity a week ago Monday and I'm not happy about it. You may recall that the Price of the VectorVest Composite got crushed on Wednesday, November 19th and Thursday, November 20th. Fortunately, the Model Portfolio was long with some high-volume Contra ETFs, so we were feeling no pain. The Price of the V V C was also down sharply on Friday, November 21st, until it was rumored that Mr. Timothy J. Geithner was to be recommended as the next Secretary of Treasury, sparking a monster reversal on huge volume. We went into cash on that rally and noted that "we are looking for a new short-term trend to develop." Why didn't I prepare you for the possible follow-through rallies that occurred on the next five days?

The reason is that I had simply become so hidebound by all the rules, procedures, conditions and restraints that we were applying to managing the Model Portfolio, that I wasn't using my head anymore. That was crazy. If I want to make big money in this market, I've got to recognize and move quickly to take advantage of great opportunities as they occur. This is what I intend to do in the future. Rules are nice, but "He who hesitates is lost." From now on I'm going to do my best to Seize the Moment.

QUICKFOLIO.
Day traders love high volatility. It gives them opportunities to quickly make huge profits. So they love what most of us hate: big, fast price movements. As far as I know, most day traders have a WatchList of volatile, high-volume stocks that they watch like a hawk. While every trader has his or her special way of playing the game, many of them live and die trading support and resistance levels. I have found this technique to be tedious, so I look for movers and shakers another way.

I use a tool in VectorVest RealTime called, "QuickFolio." It allows me to create a portfolio of stocks and track their performance from the Opening Bell with just a few clicks of my mouse. For example, I ran our "Buying Contra ETFs" strategy as of last night's close and made a QuickFolio of the top five stocks ranked by AvgVol Desc. VectorVest RealTime actually began tracking this portfolio's performance as of 8:00 AM this morning.

What I really like to do is create a variety of QuickFolios of stocks on any given day and see how they break out of the gate. Then I'll cherry pick my trades from stocks in the best performing up or down QuickFolio.

TAMING THE TIGER.
While day traders may love volatility, investors who can't sit at their computers all day hate it. So how do they make money in this jungle of a market? They execute low-risk trades by hedging their bets. Let's say, for example, that you wanted to short some stocks, but were fearful of explosive up moves that could hurt very badly. To protect yourself, you hedge your short stock positions by buying out-of-the-money Call Options. Imagine, receiving substantial credits to your account by shorting stocks and limiting your risk with relatively low-cost Call Options. To see how it's done, visit the VectorVest University to see Mr. Glenn Tompkins' outstanding "Strategy of the Week" presentation: "Taming the Tiger."