I met a lot of people at the recent Money Show in San Francisco who own stocks that are way down from their recent highs. Unfortunately, they did not take profits or protect their positions when the market rotated on the sharp 23% drop in crude oil prices. What could they have done to avoid this problem?

First of all, you can't fall in love with a stock and you can't worry about paying taxes on your gains. This means that you should always have an exit price in mind. VectorVest helps you in this regard with its Stop Prices. You can use them either as gospel or as a guide, but don't ignore them. Yes, I've heard every complaint imaginable about our Stop-Prices, stuff like they're too high, too low, too fast, too slow, so I challenge anyone to come up with a better one. See my essay of January 17, 2003.

If you were reluctant to sell a great stock, such as Potash Corp., POT, when it got an 'S' rating a month ago, what else could you have done to protect your profits? The answer lies in our Strategy of the Week, "Protecting Profits," which was first presented on March 31, 2000. It was presented again and again on the following dates: 06/08/01, 12/28/01, 02/27/04, 07/14/06, and 07/20/07. The 07/20/07 presentation is on the VectorVest University.

It's interesting to note that four of the eight techniques given in the Protecting Profits strategy involves the use of options. Remarkably, most of the people I talked to at the Money Show did not know how to trade options. That's too bad because they could have saved a lot of money with some simple option trades. Yes, the option trades I'm talking about are simple, but they aren't necessarily easy to understand. So you really need to know what you're doing when you trade options.

I learned how to trade options by reading, reading and reading. I must have read 30 books, all of them very boring, before I felt like I really knew what I was doing. And I took some very expensive courses, also very boring, before I felt comfortable making large options trades. After several years of trading, I felt that I had the knowledge and experience to write an options course that was as good as or better than any other course you'll find anywhere. The key to the VectorVest Options Course is that it takes nothing for granted. It starts with the basic definitions of stock options, the two types of options, Calls and Puts, and teaches over thirty option strategies from simple to complex, step-by-step. It's perfect for investors who want to learn how to trade options from the ground up.

Once you learn to trade stock options, you'll know how to keep the stocks you love and not lose money even if they go down. It's like having your cake and eating it too. When a good stock goes south, use options to Ease the Pain.