Saturday, December 23, 2006

Insider Trading and How To Profit From It

Checking for legal insider trading by company's key personnel & institutions is an important step whenever I analyse stocks for options trades based on earnings announcement. I came across a great article about legal insider trading as followed and I hope you would find it useful to guide your next trading decision.


We want to talk a little about legal insider trading for a minute, because we have seen interesting things happening lately that should be discussed.

When someone mentions insiders making buys or sells, all kinds of flags go up. But it is perfectly legal and ethical for insiders at corporations to sell some of their holdings and buy more when they think the time is right. The real point is "what is the motive?" That is what you (we) all need to try and perceive.

Let's say you are offered a senior management position and in your contract you get 50K shares of company stock after 2 years of service. Nothing out of whack there. Then let's say you are there for 5 years and decide that you want to buy that house up in the mountains. Is there anything wrong with selling 30K shares? Nope, not at all, it was after all part of your pay package.

On the other hand, let's say we see 3 insiders sell most of their holdings in their own company, just a month before earnings season. Does that raise a flag? Yup. When insiders are selling enmasse, it often spells trouble. Think about it. Except for a few well placed sales now and then, there isn't a lot of reason for insiders to be selling unless they don't see any good reason to hold it!

On the other side of the coin, we know of only two reasons that an insider buys his own company's stock. One is that the company puts him up to it. Yes folks, don't be shocked, companies have been known to pressure executives to buy company stock just to give the illusion that the stock is so attractive the insiders are buying it. But, it's generally only a few shares (10K or less) and a few people.

The other reason an insider will buy is that he genuinely believes the stock will appreciate in value. Well, no one has a better view of the company than the people running it right? If insiders are seeing good sales trends and can relate those trends to rising earnings, it makes perfect sense to buy some stock! Now, don't confuse this with stock "buy backs" that we are seeing now and then. A company buy back is a much different animal. It's still a "positive" but not nearly as telling as insiders deciding to buy 100K shares of their own stock.

How can you use this info? Scan the filings folks. If you see two or more insiders buying 40K or more shares of their own stock, we can almost bet you that in the next few months that stock is going to be higher. We saw it happen sometime back with NXTL. We told you that almost 100K shares were purchased by an insider, and "boom" they beat the estimates huge, spiking the stock by 60%. This guy "knew" and it's perfectly legal.

So, when you see insiders buying more than "token" amounts of stock you need to watch that stock. Likewise if you see insiders selling like they are all in a panic to get out, you need to avoid it or maybe even short it. No one knows their own business better than an insider and if they are bailing, you should too. You can also check for insider selling and buying at, just punch in the stock symbol and then scroll down and look for "insider".



Some of the web-sites where you check for legal insider trading filing :-

Wishing you Profitable in your Trading too.

Merry Christmas and a Prosperous 2007 !!!

Yours Sincerely,

Tony Chai

Tuesday, December 12, 2006

New 2007 Edition of the Options Mastery Series

Dear Traders :

The Options University is nearly sold-out of the New "Options Mastery Series 2007 Edition" and are now down to below 100 copies...

Will they release it again? Sure...

But not until March of 2007, and if I have my way, it's going up another 500 bucks to $1997.

Now that may seem like a lot...

But not when you consider what you're getting!

Mr Ron Ianieri has spent 15 YEARS on as a professional options trader to learn these secrets...

...And now you can use the same insider tricks, strategies, and secrets that Ron has used for years to dominate the crowds he was in down on the floor, making millions of dollars for the firms he has worked for... and he made some huge bonuses doing it too.

If you're asking yourself "Then why isn't he still doing it?!?"


The floor went digital, and the floor traders were phased out.

Including Ron ...

So he decided this was a chance to do what I've always wanted to do...

Teach options and trade for my myself.

These are 2 of his utmost passions.

And that's good news for you...

Because now you can tap into Mr Ron Ianieri's 15 years of experience and 'look over his shoulder' as he let you in on some of my biggest secrets and teach you about how to consistently pull respectable profit.s out of the markets using options ...

So if you're still "on the fence" we urge you to review the videos and recordings below.

Here's what one student who's been following the Mastery Series since last year had to say about the course:

"I have owned the Options Mastery Series for almost a year now .. and have had a steady winning track record of small trades.

"I started out with a $1,500 account as a result of some poor training by the "Other Guys" and now have an $9,000 account. This I consider not bad for just six months of active trading.

"It took me six months to really become comfortable with the wealth of information Ron was feeding me. It was only after that "I believe I can do this" feeling that I started to make those first small trades (one to three contracts) at first.

"Well, the strategies Ron taught really worked! I believe now that there is no limit to what I can accomplish given I stick to what I have learned. If you truly want to become successful at trading options, then Ron's course is the one you should invest your money and time into."

Jesse Malczyk

Click Here to Read What Our Other Students Are Saying

Friday, December 08, 2006

Sharing My Thoughts on Options Trading

It's been almost 2 years since I started trading options - mainly share options. I have to admit 2 years is not long compared to many successful, professional traders who have been trading in no less than 10 years. It's just that I wanted to share some of my personal experiences in this journey so far.

I remembered after graduating from Dr Clemen Chiang's Live Freely Options Trading Seminar back in Nov 2004, I started traded options based on the gapping analysis technique taught in the seminar. My initial trades were good, mostly attributed to the so-called "beginners' luck". Then the trades started turning "bad". I lost money and I began to doubt the technique. The truth is, I haven't master the technique with enough trading experiences. To make matters worst, I "got creative" and developed my own trading techniques and didn't test them first with paper trading and subsequently got punished by the market. No offence to my options trading buddies but I also traded haphazardly based on what were discussed in our online trading forum and they turned out to be losing trades as well.

Watching my capital drained so quickly made me lost quite a bit of confidence thus I shut myself off the market for a few months. In these few months I read some books related to stock & options trading by authors like Lawrence G. McMillan, William J. O'Neil, Nicolas Darvas, Gary Smith etc. I find them useful and gained some knowledge especially on the psychological aspect of trading.

I re-learned what was taught in the Live Freely Options Seminar and reminded myself to follow the steps strictly and only entered an option trade when the conditions were met. I also started a options trading journal - which is actually a MS Word document - where I recorded information like the stock options I chose to trade & had traded, the reasons to enter a trade based on fundamentals research/technical analysis, the outcome of the trade - whether good or bad, the mistakes that I've made and how to avoid them in the future etc. This options trading journal has since become a very important reference tool even till today to guide my options trades.

Once again, the first few trades were good. I've even earned more than 1000% profit from 2 of the trades as recorded here. Then I started growing bored again as a few weeks have passed and I didn't encounter any good options trades based on my gapping analysis conditions. So, I became impatient and went into my "destructive cycle" again trading options based on my "creative techniques" - without testing them with paper trades. This time - I lost money even faster than my 1st round.

So, I became inactive in the options market for a while again and during this time I brushed up my fundamentals analysis research by subscribing to Investors Business Daily SmartSelect Corporate Ratings which provide very thorough analysis of every companies' fundamentals. I learned some more technical analysis stuff like the candlestick chart patterns. At the same time, I also wrote some options trading articles in my web-site which I hope would guide beginner options traders to pick up some basic skills.

I started trading options a few months ago and this time I've been disciplined and trade options based strictly on the conditions which met my gapping analysis research criteria. If no trades satisfy my criteria, I just walk away. I'm glad to inform that so far I've some profitable trades and although I did encounter some losing trades along the way my trading capital is still healthy. I really hope that I will maintain my trading discipline this time round.

Although being disabled, I'm still persevering in this options trading journey even after taking a few hard knocks. I hope this would encourage you not to give up quickly too soon, whether you are now trading options, shares, forex, futures etc.

Here wishing everyone a Merry Christmas and a Healthy & Prosperous 2007.

Yours Truly

Tony Chai

P.S. Are there any options trading secrets? You might ask. From my experiences, winning in the options trading profession comes from the refinement of your trading techniques as you apply and learn from them during your options trading. If a particular options trading technique yields you profits consistently, jot down the circumstances which lead to such winning trades in your trading journal so that when such circumstances occur next time, you would know that entering such trades would yield a higher probability of success. It pays to be patient to stick to a winning formula although the particular technique may not produce that much trading opportunities. Remember that I lost money when I felt bored and experimented with new, untested techniques. So when you feel bored, simply stay away from the options market. Meanwhile, upgrade your trading knowledge by reading books, attending seminars or surfing the internet for relevant information.