Options Trading Strategy
An Interesting And Inexpensive Hedge Against Downside Risk
Hedging against a big stock selloff can be expensive when using options. One way to reduce the cost is by using options spreads. A more complex spread that can be useful in this situation is a put butterfly. A strategist bought over 20,000 put butterflies in SPDR S&P 500 ETF (SPY) that expire at the […]
What Is The Options Market Saying About The Albertsons/Kroger Deal?
A big deal in the grocery store space was announced last week with the potential acquisition of Albertsons (ACI) by Kroger (KR). The merger would create a grocery chain with roughly 12% control of the US market. It’s difficult to say if the deal will make it through antitrust scrutiny. Interestingly, short-term block options trades […]
Make Your Fixed Income ETFs More Interesting With Options
Even with rates going higher, fixed income ETFs don’t tend to move all that much. One way to amplify your cash flow from a fixed income product is by using options. Last week, some appeared to have sold 25,000 put spreads in the Invesco Senior Loan ETF (BKLN). BKLN has only moved in a $2 […]
This Stock Just Broke Out Of Its Uptrend
General Mills, Inc. (NYSE: GIS) seems to be poised for a price surge as per its latest charts. The company manufactures and markets branded consumer foods worldwide. Bullish Indications #1 Channel Breakout: The daily chart shows that the stock has currently broken out of an uptrend channel. This is a possible bullish indication. #2 Price above […]
Analyst Thinks This $3 Stock Could Have 85%-Plus Upside Potential
We recently started a series called “Penny Stock of the Day”. These ideas are geared towards traders with an extremely high risk appetite. Our Penny Stock of the Day is chosen by screening for stocks under $5 and then applying technical analysis on the shortlisted set of penny stocks showing unusual volume. When making these […]
Covered Call Writing
How To Use Covered Calls To Your Advantage
It’s very dangerous and scary trying to catch a falling knife or pick a bottom of any market, particularly this one. However, with the SPDR Trust (SPY) off some 25% and many individual stocks down 50% or more, it may be time for investors, especially younger ones with a longer term horizon, to start nibbling. The […]
Generating Cash Flow From The Energy Sector
The energy sector has been far and away the best performing sector over the last year with both oil and gas prices having been on the rise. A popular way to trade the energy sector as a whole is through the Energy Select Sector SPDR ETF (XLE). XLE has been a solid gainer for 2022, […]
The Synthetic Dividend Option To Generate Profits
Many companies regularly distribute a portion of their profits in the form of a dividend to attract investors and incentivize them to remain long-term shareholders. But most companies, ETFs, and commodities don’t pay a dividend at all. When there’s no dividend, the only opportunity for income or a profit comes from a capital gain (or […]
How To Calculate Your Impressive Covered Call Returns
Talking about investment yields and returns can be confusing, and actually understanding what happens can be even more daunting. However, we are trying to make money on our money, and understanding potential returns – both as percentages and dollars – helps separate good opportunities from those that are less attractive. If you have dabbled with […]
Which Is Better: Covered Calls Or Cash-Secured Puts?
Covered Calls and Cash-Secured puts seem to be the most popular choices among traders in finance and stocks. And for a good reason. The two trades in the same market, just on different terms. That’s right. And it all started with the same idea… Both kinds of trading are pretty much the same, except for […]
Options Trading Strategies
3 Stocks To Sell Now
As impressive as last week’s 6.6% rally in the S&P 500 was, it didn’t change the structure of the entrenched downtrend. Instead, it was a garden-variety retracement returning prices directly into resistance. Those who viewed the rebound with suspicion were vindicated on Tuesday when sellers returned en mass at the declining 20-day moving average. With a new […]
Roblox Stock May Have Bottomed
For months, the deep discount in Roblox (NYSE:RBLX) has beckoned to bottom fishers. But so far, trying to nail the low has resulted in bruised egos and battered accounts. The selling has been relentless, and there have been too many failed bounces to count. RBLX stock has cratered 85% from peak to trough in the largest […]
3 Of The Most-Shorted Stocks With Bearish Charts
Once more, the bears in the market are successfully defending against would-be bargain-hunters this week. And right now, with stocks under increased pressure, the price charts in these most-shorted stocks are offering investors well-qualified bearish entries to trade with the trend. It has quickly turned into a third straight week where Wall Street’s bad actors […]
3 Energy Stocks Gushing Higher
The energy sector is on fire and just broke out The Energy Sector SPDR Fund (XLE) offers a diversified way to play Friday’s strong rally in energy stocks. Occidental Petroleum (OXY) is blasting through resistance with some heat. Halliburton (HAL) has one of the cleanest setups among oil services stocks. The time to buy energy stocks is now. The […]
3 Tech Stocks To Buy As Their Trends Reverse Higher
Sentiment is warming in the land of technology companies The market recovery reached two significant milestones Tuesday. First, the S&P 500 closed above its 200-day moving average, officially placing it back on the high side of all major averages. Second, the Nasdaq, which has seen serial underperformance, closed above its 50-day moving average for the first time in over […]
Options Volatility Watch
Unlock The Next Level Of Options Trading With THIS
I’m stating the obvious when I say the markets (yes plural) currency, commodity, bonds and stocks have been extremely volatile as of late. What do we mean when we discuss volatility or the Greek term Vega? Options traders sometimes use these terms interchangeably, and while they are related, they are two distinct concepts. Volatility is one of […]
Will Volatility Remain Elevated Into Next Year?
It’s been a high volatility year in the financial markets. The VIX (Cboe S&P Implied Volatility Index) has been historically high for most of 2022. A large put sale in Proshares Ultra VIX Short Term Futures ETF (UVXY) suggests that volatility could remain at least moderately elevated into 2023. UVXY is a popular short-term volatility […]
One Way To Take Advantage Of The Volatility In Tech Stocks
Tech stocks have the started the new year with elevated volatility and quite a bit of selling pressure. The most popular tech index, Invesco QQQ Trust (QQQ), is down 5% for the year and has seen a handful of large percentage moves already. One strategist is looking to take advantage of the volatility by using […]
Why December Is Shaping Up To Be A Very Volatile Month
It looked like we might coast into the end of 2021 on a calm and seasonally bullish note with the major indices up some 25% for the YTD. But, a new Covid variant and stubbornly-high inflation have thrown a wrench into that outlook. I think December will be unusually volatile, which equates to unpredictable, which […]
Market Volatility: Trade Cautiously But Without Fear
Being a market prognosticator often means spewing thoughts and opinions to create content well beyond the reality of underlying activity. I should know, after working with Jim Cramer — the sound bite-creating master — making table-pounding proclamations and outrageous predictions, all the while, under the surface, acting as a rational, risk-averse portfolio manager. I give […]
Options Trading
5 Rookie Mistakes Most Traders Make – And How To Avoid Them
Here are five rookie trading mistakes I continually discuss with Options360 members through daily alerts and our weekly webinar calls. 1) Buying “Lottery” Tickets Too often, new traders opt for buying way out-of-the-money options as they are attracted by their low notional dollar amount. They perceive them as “bargains” and a good way to gain […]
Debunking The Myth That 80% Of Options Expire Worthless
Nearly all of Options360 trades come in a type of spread. I believe it’s crucial for positions to have some element of premium collection in order to generate consistent returns. However, a persistent and pernicious myth regarding options is that 80% of all options expire worthless. The number belies the fact that most options get […]
Let Price Action Show You What To Do In An Approaching Bear Market
Traders have access to an overwhelming amount of market indicators. But does a trader really need any of these indicators to be successful at trading? At the end of the day, the price determines our loss or profit. Therefore, we should focus our research on price action rather than time lagging indicators or market fundamentals. […]
Understanding Risk-Adjusted Returns When Trading Options
My articles this week on calculating a Twilio (TWLO) profit and Capital One Financial (COF) loss continue generating questions on how profit and loss calculations are applied to overall returns? So, I’ll dive a bit deeper into the topic. It’s a well-known investment maxim that risk is correlated to reward. But, when it comes to […]
How To Make Triple-Digit Profits With Options
Once you start looking for option trades on your own, the most important thing you can do to find trades with triple-digit profit potential is staying up on the news. The market and stocks in general move up and down over time, and the key is to identify these cycles. You will learn to decipher […]
Options Trading Basics
How To Pick The Right Strike Price (I ALWAYS Avoid This)
Today, I wanted to dive in to some reader mail. It reads… Hey Steve, I had been “taught” that if you wanted to be straight bullish or bearish a stock and use options for leverage then deep in the money was the way to go since the delta was near 100. You seem to vastly […]
The Many Uses Of Option Delta
In an option chain, the delta for a given option strike price can vary from -1 to +1. Call options have a positive delta for option buyers somewhere between 0 and +1. Calls increase in value when the underlying increases in value. Put options have a negative delta somewhere between 0 and -1 as Put […]
Trading Options 101: A Beginner’s Guide
“What is an option?” This may be a question you’ve asked yourself before. If so, options trading might be a suitable investment for you! An options contract offers the buyer the opportunity to buy or sell the underlying asset depending on the type of contract they hold. Unlike futures, the holder is not required to […]
Death, Taxes, And Time Decay
Few things are certain in life. But as the old saying goes, there is nothing quite so certain as “death and taxes”. As an Options Trader, I would enthusiastically add option time decay to that list. Options offer traders and investors more leverage and risk mitigation than just purchasing shares outright. For example, if I were to […]
Are You An Options Buyer Or An Options Seller?
Options are an increasingly popular financial product that gives traders numerous ways to manage risk while significantly leveraging capital. They are a powerful trading “tool” that can be bought, sold, and combined in a seemingly limitless number of ways to achieve a specific objective. One of the bigger questions for new — and even experienced […]
