Page 830 - How to Make Money in Stocks Trilogy

Breaking Boards: Successful Trades and Lessons Learned 101

• KEY POINTS •
• During the trading session, look for stocks moving up on
unusual volume using a MarketSmith screen or by check-
ing Stocks on the Move at Investors.com.
• Focus on the “N” in CAN SLIM, newer companies with
products or services that are in big demand by consumers.

Using IBD to Trade Options

Dave Whitmer
Friday, June 29, 2007, Dave was standing in line for an iPhone. He purchased
one of the last ones in a mall on the outskirts of Pittsburgh. “It was the first
Apple product that I had ever bought,” Dave says. “I spent the entire week-
end playing with it and could not believe how much better it was than the
hype. I had the luxury of having Navy friends all over the country, and they
told me that there were lines around the block at every Apple store. Because
of my understanding of the ‘N’ in CAN SLIM, I knew that high demand for
the iPhone would drive Apple’s earnings and sales higher and create institu-
tional demand for the stock. So I decided to buy Apple July call options at the
open on Monday for $1.20 a share on its pullback to the 21-day moving aver-
age. I closed out the option position at $9.00 per share as the stock went over
$140 in price. This was a 750% gain in just two and a half weeks. Conviction
in the product gave me the confidence to execute this trade.”

Jeannie McGrew
Jeannie reads IBD’s Big Picture column every day to make sure she stays in
sync with the overall market trend. In December 2011, when the market
began a new uptrend, Jeannie waited to see if the follow-through day would
work and leading stocks were breaking out of sound base patterns. In
January 2012, when she observed that the overall trend was acting strong
and leading stocks were holding onto their gains, she bought SPY calls.
Jeannie started off with $300,000 in her account and increased it to
$410,000 in less than three months for a 36% gain. She says, “The most
important thing is to manage your risks and keep your losses small.”