Options Trading Strategy

The Options Way To Play Takeovers

The Options Way To Play Takeovers

Yesterday, financial media revitalized the term “merger Monday” as some $60 billion in deals were confirmed. A few such as LVHM’s bid for Tiffany (TIF) has surfaced a few weeks ago. But, others such as Schwab’s (SCHW) move to acquire TD Ameritrade (AMTD) came to light just recently, and Novartis (NVS) purchase of Medicines Co. (MDCO) came as a surprise and sent shares surging. Overall, […]

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Every Time This Stock Goes Up $1 This Trader Makes $1.2 Million

Every Time This Stock Goes Up $1 This Trader Makes $1.2 Million

One of the more intriguing investment stories in 2019 was the huge jump in government bonds prices. Long-term bonds, in particular, soared higher for a substantial portion of the year, outperforming stocks – and with lower volatility. Stocks have since caught up with and passed bonds (year-to-date), but from a risk-adjusted perspective, bonds have arguably […]

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What Is A Collar Option Strategy And When To Use Them

What Is A Collar Option Strategy And When To Use Them

Stocks keep grinding to new highs but there’s an uneasy feeling we might get a year end shake out. On the macro front, trade talks with China still appear to be unresolved. In addition, Home Depot (HD) and Kohl’s (KSS) reported disappointing earnings, sending their shares down 7% and 15% respectively. Of more concern is whether these reports represent […]

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The Latest Cold Front Is Heating Up Natural Gas Options

The Latest Cold Front Is Heating Up Natural Gas Options

It’s always funny to read about energy prices going up whenever there’s a cold front. It’s like people forget that there’s such thing as weather and (depending on where you live) it changes with the seasons. As the temperature starts cooling in the fall, you’ll often see headlines like “Heating Oil Prices Up on Colder […]

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Gold Prices Could Be Headed Much Higher

Gold Prices Could Be Headed Much Higher

Although the stock market has had its share of ups and downs over the last couple of months, the price of gold has been surprisingly stable. In August, the gold futures reached $1,500 an ounce. Fast forward to mid-October, and futures are still right around that $1,500 level. Why have gold prices remained elevated despite […]

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Covered Call Writing

Understanding A Covered Call Strategy

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 […]

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How To Get Paid An Income By Avid Coffee Drinkers

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 […]

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Are Tech Stocks Going To New Highs By Year-End?

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 […]

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Are Bonds Going To Continue To Be The Hottest Asset Class?

Are Bonds Going To Continue To Be The Hottest Asset Class?

The stock market has been plenty volatile over the last couple weeks, but the real story has been what’s going on in the bond market. Many of the financial headlines you see are about the inverted yield curve or the parabolic move in US bonds. Let’s start with the inverted yield curve. What does that […]

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Generating Income And Protecting Yourself During A Market Selloff

Generating Income And Protecting Yourself During A Market Selloff

Investors have finally cracked under the pressure of the trade war with China. Stocks, which were at all-time highs just two weeks ago, are now 6% off those highs as of this writing. Although the S&P 500 is still up 13% year-to-date, Monday’s 3% drop set the alert level to red. Meanwhile, safe-haven investments like […]

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Options Trading Strategies

3 Stocks Roaring Higher After Earnings

3 Stocks Roaring Higher After Earnings

Earnings is fueling these stocks higher. Buy them. Traders love earnings season because it reignites flagging trends or sparks new ones. And that can create some compelling and actionable trade ideas. Today we’ll look at three stocks to buy that are pushing higher on better-than-expected earnings. They all hail from the technology sector, which has […]

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3 Bank Stocks To Buy After Earnings

3 Bank Stocks To Buy After Earnings

Consider these options cash flow strategies in JPM, BAC and C stock Earnings season is upon us, and as usual, bank stocks led the way. If you couldn’t tell by this week’s rally in the S&P 500, the market cheered the results. With the recent gains, more upside could be on the way.  Today, we’ll look […]

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3 Strong Stocks To Buy

3 Strong Stocks To Buy

Ignore the messy market and buy these market leaders The ranks of strong stocks are dwindling. But there are still a few diamonds in the rough that belong atop any stocks to buy list. But first, some context is in order. So far, October is living up to its bad reputation. It’s not only the […]

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3 Bull Flag Stocks To Buy

3 Bull Flag Stocks To Buy

The bulls’ banner waves in these three stocks. Buy them. The drama unfolding in Washington has turned the uncertainty dial up to 11. But many stocks are staying above the noise and actually offer compelling setups ahead of the weekend. Today we’ll look at three of the best stocks to buy. Wednesday’s rally was important. […]

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3 Stocks To Buy After The Fed Meeting

3 Stocks To Buy After The Fed Meeting

These three stocks are breaking out RIGHT NOW The Fed Meeting is over and the market uptrend remains intact. Here’s the key takeaway: bulls should celebrate and traders have a green light for finding stocks to buy. Wednesday’s decision to cut the Fed’s target rate by a quarter-point arrived as expected. While some may quibble […]

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Options Volatility Watch

Protection Against A December Volatility Spike

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 […]

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Are We Headed Back To A Low Volatility Market?

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 […]

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Is Volatility Going To Continue To Plummet This Summer?

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 […]

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What’s In Store For Market Volatility? And How Do We Trade It?

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. […]

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Earn 272% If Volatility Spikes By The End Of March

Earn 272% If Volatility Spikes By The End Of March

As volatile as 2018 was in stocks, 2019 so far has been anything but. After the first two months of the year, market volatility has been nearly non-existent. It’s much closer to the ultra-low volatility environment of 2017, where the VIX barely cracked 15 the entire year. Of course, we’re starting off from a higher […]

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Options Trading

Using Options To Invest Tax-Efficiently

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 […]

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Earnings Season: What To Know Right Now Before Making A Trade

Earnings Season: What To Know Right Now Before Making A Trade

It’s that time of year again: earnings season.  Things will officially kick off next week when big banks such as Bank America (BAC) and JP Morgan (JPM) report Monday and Tuesday, and then move into some big tech such as Netflix (NFLX) and IBM (IBM) on Wednesday afternoon. After a few months of being waffled and swayed by political trade […]

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Is It Time To Start Buying Options Instead Of Selling Them?

Is It Time To Start Buying Options Instead Of Selling Them?

In a world of ultra-low interest rates, it seems every investor is searching for yield. Of course, that should come as no surprise when 10-year notes are yielding something like 1.6%. A yield like that is certainly not going to fund most people’s retirement! Given the yield of government bonds, it’s also no wonder that […]

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The One Rule You Must Follow When Trading Options

The One Rule You Must Follow When Trading Options

When people talk about options trading, the conversation often turns to ultra-risky strategies like buying a call or put options — ahead of an earnings number in the hope of being on the right side. The upside in getting lucky on such an unpredictable event is a big, fat profit. The downside when you’re wrong? […]

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Have Option Gamma Trades Taken Control Of The Market?

Have Option Gamma Trades Taken Control Of The Market?

Back in my day as a market maker on the floor of the Chicago Board of Options Exchange (CBOE), the third Friday of the month was known as ‘gamma day.’ That was prior to 2005 when weekly options were introduced—to show my age, I was on the CBOE from 1991-2002—and ever since ‘gamma day, it has been a weekly occurrence. Actually, […]

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Options Trading Basics

The Relationship Between Volatility & Vega

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 […]

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2 Essential Options Trading Concepts That You Need To Know

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 […]

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The Inner Workings Of Time Decay In Options Trading

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 […]

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The Options Strategy That You Need To Know

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 […]

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Using Cash-Secured Puts: The AT&T Example

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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