http://www.options-trading-education.com/4455/buy-barnes-and-noble/
Buy Barnes And Noble
The lucky thing would have been to Buy Barnes and Noble stock a week ago. The share price rose by as much as three quarters after news broke of Microsoft investing three hundred million in a Barnes and Noble subsidiary involving the Nook reader as well as other businesses. A key aspect of the deal is that Windows 8 will feature a Nook application. Thus Windows users will have access to a huge catalog of e-books and other digital material and Barnes and Noble will have the potential for a greatly enlarged subscriber base. It not too late to Buy Barnes and Noble stock but, at this point, the run up has already happened. It is not, however, too late to trade options on Barnes and Noble Stock. As often happens after a deal such as that between Barnes and Noble and Microsoft, the stocks in question may go up or may go down. A little technical analysis will help the options trader decide where market sentiment is going. A simple strategy such as a long straddle will allow the trader to profit if the stock continues to go up or if it reverses in a big correction.
Buy Barnes and Noble if the Stock Goes Up and Sell if it Goes Down
Options trading need not be excessively complicated. The long straddle is a case in point. There are three possibilities for the near term future of Barnes and Noble Stock. It may go up. It may go down. And it may stay put. Calls on Barnes and Noble allow the options trader to buy Barnes and Noble stock at the strike price, the contract price, no matter how high the price might actually go. Puts on the stock will allow the trader to sell the stock at the strike price no matter how low the price might fall. In purchasing a call and a put on the same stock with the same expiration date the trader executes a long straddle. He limits his risk to the price of the options contracts. As always the strike prices and spot prices in options trading is where the profit is.
On the face of it the deal that Barnes and Noble made with Microsoft is great. Investors saw this and bid the price of the stock up. But, Barnes and Noble still has the overhead of many large book stores in a world in which online sales are typically more efficient and cost effective. That is why many believed that Amazon.com would eventually drive Barnes and Noble out of business, just like it has done with many other bricks and mortar retailers. Thus there is still a significant downside potential for Barnes and Noble. On the other hand Barnes and Noble has a treasure trove of content and is looking for a way to sell it. The hand held eBook readers like Kindle and Nook are mutually exclusive. Thus it is all too easy for literary types to buy a Kindle and only read material sold by Amazon. The world of Windows uses, however, is huge and giving all Windows users access to material previously only available on a Nook is huge.
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-Barnes-And-Noble
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-Barnes-And-Noble
3. The lucky thing would have been to
Buy Barnes and Noble stock a week
ago.
The share price rose by as much as
three quarters after news broke of
Microsoft investing three hundred
million in a Barnes and Noble
subsidiary involving the Nook reader as
well as other businesses.
www.Options-Trading-Education.com
4. A key aspect of the deal is that
Windows 8 will feature a Nook
application.
Thus Windows users will have access
to a huge catalog of e-books and other
digital material and Barnes and Noble
will have the potential for a greatly
enlarged subscriber base.
www.Options-Trading-Education.com
5. It not too late to Buy Barnes and
Noble stock but, at this point, the run
up has already happened.
It is not, however, too late to trade
options on Barnes and Noble Stock.
www.Options-Trading-Education.com
6. As often happens after a deal such as
that between Barnes and Noble and
Microsoft, the stocks in question may
go up or may go down.
A little technical analysis will help the
options trader decide where market
sentiment is going.
www.Options-Trading-Education.com
7. A simple strategy such as a long
straddle will allow the trader to profit
if the stock continues to go up or if it
reverses in a big correction.
www.Options-Trading-Education.com
8. Buy Barnes and Noble if the Stock Goes
Up
and Sell if it Goes Down
www.Options-Trading-Education.com
9. Options trading need not be
excessively complicated.
The long straddle is a case in point.
There are three possibilities for the
near term future of Barnes and
Noble Stock.
www.Options-Trading-Education.com
10. It may go up.
It may go down.
And it may stay put.
www.Options-Trading-Education.com
11. Calls on Barnes and Noble allow the
options trader to buy Barnes and
Noble stock at the strike price, the
contract price, no matter how high
the price might actually go.
www.Options-Trading-Education.com
12. Puts on the stock will allow the
trader to sell the stock at the strike
price no matter how low the price
might fall.
www.Options-Trading-Education.com
13. In purchasing a call and a put on the
same stock with the same expiration
date the trader executes a long
straddle.
www.Options-Trading-Education.com
14. He limits his risk to the price of the
options contracts.
As always the strike prices and spot
prices in options trading is where the
profit is.
www.Options-Trading-Education.com
15. On the face of it the deal that
Barnes and Noble made with
Microsoft is great. Investors saw this
and bid the price of the stock up.
www.Options-Trading-Education.com
16. But, Barnes and Noble still has the
overhead of many large book stores
in a world in which online sales are
typically more efficient and cost
effective.
www.Options-Trading-Education.com
17. That is why many believed that
Amazon.com would eventually drive
Barnes and Noble out of
business, just like it has done with
many other bricks and mortar
retailers.
www.Options-Trading-Education.com
18. Thus there is still a significant
downside potential for Barnes and
Noble.
On the other hand Barnes and Noble
has a treasure trove of content and
is looking for a way to sell it.
www.Options-Trading-Education.com
19. The hand held eBook readers like
Kindle and Nook are mutually
exclusive.
Thus it is all too easy for literary
types to buy a Kindle and only read
material sold by Amazon.
www.Options-Trading-Education.com
20. The world of Windows
uses, however, is huge and giving all
Windows users access to material
previously only available on a Nook
is huge.
www.Options-Trading-Education.com
21. The ability of to buy Barnes and
Noble eBooks will pass to millions of
computer users, which fact was not
lost on the markets.
www.Options-Trading-Education.com
22. We only mention one long options
strategy in this case but there are
any number of relatively simple
options strategies.
www.Options-Trading-Education.com
23. As always we are not suggesting
that one buy Barnes and Noble
options or ignore them.
The point of this exercise is to
discover useful strategies for trading
options.
www.Options-Trading-Education.com
24. For more insights and useful information
regarding options and options
trading, visit
