Options Trading Strategy
Stocks Are Plunging – Is Gold The Right Hedge?
When the stock market does its best impression of a swan dive, it tends to come from an unexpected catalyst. It’s generally not something about interest rates or corporate earnings or jobless numbers. Those factors matter over time, but they don’t usually cause sudden, severe moves in the market. No, very large selloffs often come […]
Will Stocks Continue To Rally Despite The Coronavirus Scare?
The stock market can be a crazy place. The unpredictability of the financial markets is what makes them so exciting and challenging for traders (and investors). While the long-term direction of stocks has always been up, there are definitely significant periods of volatility over shorter time frames. For instance, this year we’ve already had a […]
What’s In Store For Chipmakers In 2020?
2019 is at an end, and it was undoubtedly a great year for stocks. The S&P 500 was up over 28% for the year. However, semiconductor companies had an even better year. VanEck Vectors Semiconductor ETF (SMH) was up nearly 62% over the same period. Granted, SMH did plunge sharply at the end of 2018, so it had […]
The Winning Way To Play Options During The Holidays
Back in 1992 when I was a market maker on the floor of the Chicago Board of Options Exchange (CBOE) and Board of Trade, a crazy event occurred; Lake Michigan started pouring into underground tunnels and flooding the city in what became known as the Great Chicago Flood. Most of downtown, including the exchanges, were closed for three […]
Where Are Interest Rates Headed In 2020?
One of the big questions for the financial markets as we head into the next decade is where are interest rates going as we kick off a new year. On one hand, the labor market is strong and stock prices are at all-time highs. On the other hand, many other economic indicators are showing a […]
Covered Call Writing
Why Smart Investors Use Covered Calls To Profit
Recent market volatility has both put traders on edge and pumped up the volatility in options. Those two usually go hand in hand and they create a great opportunity for longer term investors with a cooler demeanor to capitalize on the current dislocation. One of the best, and most popular approaches, especially among investors that […]
Here’s What A One-Year Covered Call In Microsoft Looks Like
In the era of ultra-low interest rates, yield enhancement strategies have become prolific. Actually, let’s take a step back. It used to be that you could generate a reasonable yield from fixed interest investments, like government or corporate bonds. However, with interest rates approaching zero, those types of investments just don’t provide robust yields. So […]
Understanding A Covered Call Strategy
The other day, I wrote about how people are piling into funds, then employ option premium-selling strategies, particularly covered calls or buy-writes. I figure it’s a good time to drill down into exactly what these strategies entail and highlight both the pros and cons. The covered call strategy is one of the most popular options strategies especially among investors that […]
How To Get Paid An Income By Avid Coffee Drinkers
Coffee is one of those consumable goods that you simply don’t want to mess with. The country may fall into a deep recession. The ocean may rise to levels that engulf the coastlines. A meteor at this moment may be hurtling towards Earth. And yet, it won’t stop coffee drinkers from going to buy their […]
Are Tech Stocks Going To New Highs By Year-End?
The funny thing about stocks this year is that it feels like we’re having a rough year. The last few months have brought quite a bit of volatility to the market, and with it comes the feeling that the stock market is struggling. However, looking at the numbers, you may be amazed to see the […]
Options Trading Strategies
3 Stocks To Buy Following Great Earnings
These stocks should keep winning after their impressive reports For many companies, nothing is more important than the quarterly earnings report. Disappoint the masses, and you suffer. Impress them, and you score instant gains. Amazon (NASDAQ:AMZN) was the ultimate example of the latter this season. Months of profits were jammed into a single overnight session. So today, […]
3 Options Trades For The Hottest Stocks On The Street
Compelling setups beckon for BA, NFLX and AMD Earnings season is drawing to a close, and I’m finding it much easier to discover trade ideas for individual stocks. Today we’ll look at three of the best post-earnings setups and build-out options trades to capitalize on. Nothing ignites volatility quite like an earnings announcement, and these […]
3 Tech Stocks To Play Ahead Of Earnings
Reduce risk into earnings for AAPL, MSFT and AMD stock Tech stocks are running into earnings season with big profits in the bag. Sector leading companies like Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) have generated double-digit gains since their last quarterly reports. Shareholders’ hopes are running high that the upcoming earnings will be good enough to keep the rally […]
3 Oil Stocks That Are Worth Looking Into Now
Yesterday’s plunge in oil stocks creates opportunity Saber rattling in the Middle East created a roller coaster ride in asset prices this week. Oil prices initially ripped and then rapidly reversed yesterday, ending with a nasty 4% drop. Energy stocks fell across the board in the wake of the whiplash. While the volatility can be […]
3 Energy Stocks To Buy
It’s time to bottom fish in this beaten-down sector Don’t look now, but the energy sector is starting to percolate. Apparently we’ve reached the stage of the market rally where they’re coming after the dogs. But don’t hate, participate! I’ll show you how by offering three different energy stocks to buy. Here are a few […]
Options Volatility Watch
Is The Low Volatility Market At An End?
2019 can be roughly divided into two market regimes. There were periods of high volatility and market choppiness, notably in June, August, and early October. Then, there were the stretches of low and falling volatility – January through May and mid-October through the end of the year. It certainly seemed like January of 2020 was […]
Protection Against A December Volatility Spike
Stock market activity has essentially slowed to a crawl, and many traders are wondering if that’s it for volatility in 2019. Some traders are jokingly wondering if they should take the rest of the year off. It certainly seems like the market isn’t interested in action these days. There are certainly mechanical reasons for the […]
Are We Headed Back To A Low Volatility Market?
Both 2018 and 2019 have been characterized by periods of choppy markets and higher volatility. It’s been quite the change of pace from 2017, where it seemed like we would never experience market volatility ever again. Of course, nearly everything in the financial markets moves in cycles. Low periods of volatility will inevitably be followed […]
Is Volatility Going To Continue To Plummet This Summer?
July is traditionally a very slow month for the financial markets. Not only is it the prime vacation month for families (most kids go back to school in August), but there’s also the July 4th holiday week. Generally speaking, investors and traders are often far away from the markets at this time of year. Even in […]
What’s In Store For Market Volatility? And How Do We Trade It?
Kids may be getting out of school, but it doesn’t seem like most traders are ready to go on vacation. In fact, it appears that many market watchers are glued to their screen. There’s undoubtedly been a lot more volatility over the past couple weeks than what we’ve gotten used to as the summer approaches. […]
Options Trading
Using Options To Protect Gains While Maintaining Upside Potential
The stock market is hitting all-time highs and investors are torn between the possibility of an economic downturn, or entering a new leg of the bull market. Last week’s article noted that money managers were increasingly using call options to gain additional exposure to the stock market. Some of this behavior might be deemed as a reckless […]
2 Distinct Concepts That Options Traders Need To Know
Market volatility is starting to tick back up as macro headlines from Iran/Iraq come in. And now we are about to enter earnings season, which not only will cause big moves in the individual names, but over the past few years, has proved to be a volatile first quarter. More specifically, on individual names that are […]
How To Read Options Activity For Clues To A Move
Using option activity as an indicator of impending price moves is difficult, subjective, and unreliable. That being said, it can help confirm other indicators and increase the probability of a profitable trade. Indeed, there have been many situations in which activity in the options pits accurately predicts or presages an impending price move. There are […]
The 6 Rookie Mistakes Options Traders Should Avoid
I thought this would be a good time to review some of the common mistakes traders make when using options. As shoppers have become increasingly savvy in finding online bargains and discounts, we see similar behavior spilling into other aspects of their lives. This includes investment advice and stocks they seek. But sometimes it’s better to […]
Using Options To Invest Tax-Efficiently
With 2019 drawing towards a close, it’s time investors need to look at their portfolios for rebalancing and determining asset allocation. While it should never be the driver of investment decisions, one needs to always keep an eye on tax implications as they can have a significant impact on the final total returns. Typically, at […]
Options Trading Basics
The Relationship Between Volatility & Vega
Market volatility is starting to tick back up as macro headlines ranging from inverted yield curve to drones striking Saudi oil complexes to impeachment to failed IPOs have ratcheted up uncertainty and nervousness. And now we are about to enter earnings season which not only will cause big moves in the individual names but could […]
2 Essential Options Trading Concepts That You Need To Know
Market volatility has contracted back down to historically low levels with the VIX, which acts as the benchmark measure, sitting just above 52-week low at the pre-teen level of 12. But, with earnings season upon us, tons of IPOs such as Uber hitting market, and pickup in mergers and acquisition activity such as Chevron’s (CVX) $33 billion […]
The Inner Workings Of Time Decay In Options Trading
After a steep decline and rapid rebound, the stock market seems to be settling in. Following such a period of big moves and high volatility, I wouldn’t be surprised if it went nowhere for the next couple weeks, or until the next earnings period. But, as an options trader, one thing’s for certain: Time never stands […]
The Options Strategy That You Need To Know
One of the most popular options strategies is the covered call, or buy-write, in which one owns underlying stock and sells a call. It’s a bullish position which generates income through a premium collection. Many investors and money managers consider it a very conservative approach and employ it in their retirement accounts. But suggest selling a put, and […]
Using Cash-Secured Puts: The AT&T Example
Investors that have the goal of generating income from their portfolio generally have two methods at their disposal to do so. They can simply increase the size of their portfolio and thereby boost the number of dollars that are produced by the portfolio’s average yield. But “have more money” is rarely an option. Alternatively, investors […]
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