Options Trading Strategy

Stocks Are Plunging – Is Gold The Right Hedge?

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 […]

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Will Stocks Continue To Rally Despite The Coronavirus Scare?

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 […]

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What’s In Store For Chipmakers In 2020?

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 […]

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The Winning Way To Play Options During The Holidays

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 […]

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Where Are Interest Rates Headed In 2020?

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 […]

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Covered Call Writing

How To Calculate Your Impressive Covered Call Returns

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 […]

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Which Is Better: Covered Calls Or Cash-Secured Puts?

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 […]

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Why Smart Investors Use Covered Calls To Profit

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 […]

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Here’s What A One-Year Covered Call In Microsoft Looks Like

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 […]

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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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Options Trading Strategies

3 Sickly Covid Stocks To Buy As Omicron Gets Around

3 Sickly Covid Stocks To Buy As Omicron Gets Around

As pandemic fears roil the market, don’t read last rites to these Covid stocks Not that it ever left entirely. But Covid-19 is back with a vengeance. Today, let’s explore three sickly-looking Covid stocks to buy which should find successful resuscitation efforts worth investing for in 2022 and beyond, whatever that might really look like. […]

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The Top 10 Stocks To Watch This Week For Possible Breakouts

The Top 10 Stocks To Watch This Week For Possible Breakouts

Picking a winning trade on a consistent basis is not simply a stroke of luck. It’s the result of calculated screening, planning, and deliberation. With this in mind, we have started a new weekly series on our top 10 stocks to watch this week — stocks that look poised for a possible breakout in the […]

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4 Top Stock Trades For Friday: Bitcoin, AAPL, PYPL, BABA

4 Top Stock Trades For Friday: Bitcoin, AAPL, PYPL, BABA

Here are the top stock trades we’re watching for Friday morning Thursday was full of more tricky and choppy trading as the monthly options expiration nears, which has traders frustrated with the action. Let’s look at how the charts are shaping up for a few top stock trades. This article originally appeared at InvestorPlace.   […]

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Four Trades To Consider This Week

Four Trades To Consider This Week

Big news made it to my desk at the end of last week. Republican congresswoman Nancy Mace is spearheading a new marijuana legalization bill. A Republican backed legalization effort would be incredible for cannabis stocks across the board, so I’ve been monitoring the markets since last Thursday’s announcements for profitable targets. The bill reportedly seeks […]

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3 Options Trades To Play Both Sides Of The Market

3 Options Trades To Play Both Sides Of The Market

Low-risk entries await in today’s trio of options trades to consider The S&P 500 just topped off its best October performance in six years. So much for the seasonal headwinds haunting stocks this year. Instead, a powerful bid beneath the surface continues to propel equities to record highs. Just this week, the small-cap-laden Russell 2000 Index finally […]

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Options Volatility Watch

Why December Is Shaping Up To Be A Very Volatile Month

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 […]

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Market Volatility: Trade Cautiously But Without Fear

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 […]

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Is The Low Volatility Market At An End?

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 […]

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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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Options Trading

Stop Trading Options Like Stocks (Gamestop Example)

Stop Trading Options Like Stocks (Gamestop Example)

“Options are the same as stocks, just cheaper!” Ever heard a pitch start like that? Well, it’s wrong. Crazy wrong. Options trade much differently than stocks, and thus why it’s easier to lose money with options (and this is coming from a 20+ year options trader). One key difference is… Find out here This article […]

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Using Options To Help Predict Big Market Moves

Using Options To Help Predict Big Market Moves

Options order flow, particular large or unusual block trades, can potentially help traders predict where a big market move may occur.  Large traders will often use options on ETFs in order to take a directional position on a major asset class or industry.  For example, using the iShares iBoxx $ Investment Grade Corporate Bond ETF […]

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How To Profit During October’s Earnings Season

How To Profit During October’s Earnings Season

It’s been a tumultuous 18 months since Covid first descended, roiling personal lives, businesses, and the markets.  While things keep continually flowing, we humans (prisoners to time), like to mark the days segmenting periods in order to assess past actions and set future goals. Today marks the end of Q3, as September proved to be […]

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Using Options To Protect Gains While Maintaining Upside Potential

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 […]

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2 Distinct Concepts That Options Traders Need To Know

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 […]

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Options Trading Basics

How Do Options Work? Learn The Lingo, Pros, And Cons

How Do Options Work? Learn The Lingo, Pros, And Cons

Options trading gets a bad rap for being complicated and risky. But investors don’t seem to care, as options are becoming quite popular. When done right, becoming an options trader can actually ease the risk of owning stocks and generate extra cash for retirement. If your interest is piqued, you might be wondering, “How do […]

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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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