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Investing online for dummies 5th edition - Sindell K.

Sindell K. Investing online for dummies 5th edition - Wiley publishing , 2005. - 409 p.
ISBN-10: 0-7645-8456-1
Download (direct link): investingonlinefordu2005.pdf
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Share the cost with a friend. You can use a buddy system to reduce the cost of purchasing your first share. You and a friend pay the brokerage to purchase two shares. Have both shares registered to one person and join the companyís DRIP. After youíve joined, transfer one share to your friend and split the cost of the fees.
Join the NAIC. The National Association of Investors Corporation (NAIC) enrolls people in any of more than 100 DRIPs via its Low Cost Investment Plan. The NAIC enrolls its members in a company for a $7 per company fee. Membership in the NAIC is $50 for individuals. See the NAIC Web site at www.better-investing.org or telephone 801-583-6242 for details.
Chapter 15: Looking for the Next Big Thing: IPOs, DPOs, and DRIPs 299
Use a deep-discount online broker: Sometimes, the simplest way to purchase your first share is to go through a deep-discount broker. Online brokerage costs vary from $7 to $40. To participate in the DRIP, the stock must be registered in your name.
Selecting the right DRIP
DRIPs have many advantages, but you shouldnít let one characteristic be your sole criterion for purchasing a stock. Regardless of how attractive the DRIP is, you still need to make certain that the stock fits in with your overall investment strategy. In other words, donít select a stock just because it has a DRIP. Check out these sites for more information about dividend reinvestment plans:
DRIP Central (www.dripcentral.com) offers DRIP information for beginning investors. The Web site provides links to useful online articles, newsletters, directories, and other DRIP Web sites.
DRIP Investor (www.dripinvestor.com) offers suggested books, an investor glossary, and DRIP information. Subscriptions for the monthly Internet newsletter are $42 for six months and $69 for one year with a free one-month trial period.
NAIC Low Cost Plan Overview(www.better-investing.org/about/ lowcost/faq.html) offers a terrific plan to get your first share without going through a broker. For a one-time setup charge of $7 plus the price of one share of stock in any of the participating companies listed, you can get started with a new holding in your personal portfolio. However, transactions take between 8 to 12 weeks for investing in monthly companies. Companies investing quarterly require even more time.
300 Part III: Expanding Your Investment Opportunities
Chapter 16
Taking the Option: Alternative Investing
In This Chapter
^ Increasing your stock profits with options ^ Recognizing the characteristics of calls and puts ^ Locating online option quotes, news, calculators, and screens ^ Avoiding mistakes by testing your strategies online ^ Selecting the best option analysis software
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ˇ n this chapter, I explain how purchasing stock options can assist online investors to make money in a bear or bull market. Here, you find the basics of online investing in stock options, as well as discover which Internet sites provide guidance, news, quotes, online tools, and software to help you leverage your investment dollar. You can uncover which exchanges list stock options and also gain an understanding of the online brokerages that specialize in these types of transactions as well as the commissions that they charged.
Trading Stock Options
Suppose that a well-known novelist decides to let Hollywood make a movie based on one of her books. The novelist receives a payment from a Hollywood producer for the option of deciding within a specified time to make the movie. If the Hollywood producer decides to go ahead and make the movie, the novelist sells him the screen rights. If the Hollywood producer changes his mind, the novelist keeps the option payment and her novel.
302 Part III: Expanding Your Investment Opportunities
Trading stock options is a similar transaction. Options are contracts between a buyer and a seller. These contracts represent the right of the investor to buy or sell shares of the stock that the shares represent, called the underlying stock. Contracts are usually for 100 shares and donít oblige the investor to purchase or sell shares of the underlying stock.
Types of option contracts
An option is a contract between a buyer and a seller. An option contract that gives the owner (holder) the right, if exercised, to buy or sell a security or index at a specific price, called the strike price, within a specific time period. Option contracts are generally available for one to nine months, although some longer-term options are available on selected securities. Each contract usually equals 100 shares of stock. Calls and puts are two types of options, and I explain them in the following sections.
Why buy stock options? Stock options enable investors to position themselves for a big market move even when they donít know which way stock prices will move. For example, the cost of the premium (the amount paid for the option contract) is often less than what the investors would lose if they purchased shares that later suffered a steep price decrease.
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