Market CommentaryMore Market Commentary
Until very recently, the Biotech sector was the most energetic engine behind the Nasdaq bull market. Over the last few months, however, it has been notably lagging. Sectors get ahead of themselves as investors and traders chase momentum, which is why Biotech has fallen into a mini-bear market. The Nasdaq Biotech ETF , my proxy for the sector, has taken a 20-25% haircut from the all-time highs posted in July.
Of course, given its huge multi-year run-up, this down-draft is potentially nothing m...Read More
At least one trader is not expecting holiday cheer for retail stocks. Less then 30 minutes into Monday’s session, 25k of the XRT Dec 12/31 44-40 put spreads traded on the PHLX.
The trader bought 25k XRT Dec Quarterly 44 Puts for $1.25 and sold 25k XRT 12/31 Quarterly 40 Puts $0.22, establishing a Bear Put Spread for a net debit of $1.03.
The total premium outlay for this trade was $2.575M with contracts that have the potential to control 2.5M share of the underlying .
Perhaps the Fed will ...Read More
Hey, Traders from around the world! I wrote a little number on bear put spreads last week. I figured I would just follow up with its sister, the bull call spread.
What: A bull call spread is a semi non-directional strategy involving two option legs: a call that you purchase and one that you sell. What I like about bull call spreads is it’s a limited return, limited risk strategy. It is cheaper than just straight up buying a call, even though there is some addition commission, due to the extr...Read More
Doctor copper, can no longer be viewed as a leading indicator, in fact, a name change might be in order. A change of name from Dr Copper to deadbeat copper might in order, given its dismal record over the years. After the financial crisis of 2008-2009, the economy, the stock markets and copper parted ways; while the markets and the economy trended higher, copper plunged into an abyss, and it is still trying to find its footing.
All Jokes aside, the reason copper is diverging from the market...Read More
Traders do not have a crystal ball. Traders try and get an “edge” and then maximize his/her return to risk. A technical trader may lean on support/resistance levels or a fundamental trader may dive into various SEC filings. In either case, you are looking for that “edge”. Essentially in this case you a looking for a reason to or a level to enter. For me as an options trader, it’s a numbers game. Find a favorable set up based on a combination of technical and fundamental analysis, maximi...Read More
Featured StoriesMore Featured Stories
Despite the lack of broker approval, short option trading can be a high probability strategy
In last month’s article, we focused on the risks and challenges of short option trading, but now let’s center on the positive. The primary advantage of an option selling strategy is its ability to generate profits regardless of market direction. Further, an option seller can be wrong in regards to market direction and still make money. It is the only strategy that I’m aware of that offers such a hi...Read More
On Wednesday night, mobile payment processing company Square is expected to price its 27.0 million share IPO within a range of $11-$13, equating to total gross proceeds of $324.0 million, based on the mid-point of the proposed price range. As followers of the IPO market are keenly aware, high-profile deals – particularly from the technology sector – have been few and far between over the past several months. There will be no shortage of hype surrounding this deal, though, and the scarcity o...Read More
If you’re looking to put some high percentage option premium in your holiday gift bag, taking the opposite tack of the public in Natural Gas could be a great bet this year.
A popular notion among the public is that you buy natural gas ahead of winter. Gas prices, they reason, will have to rally once it gets cold out, right?
It sounds great but as with many things in investing, what sounds logical is often misleading folklore. The reality of it is this. Cold weather will indeed increase deman...Read More
Financial media and the financial industry pepper us with advice and recommended choices for “properly” diversifying our portfolios.
Almost without fail, this magic formula consists of a mix of stocks, bonds and cash. The more adventurous may go as far as recommending a real estate investment trust or Master Limited Partnership .
Yet, CNBC.com ran an insightful article several months back entitled “The Top 5 Mistakes Made by High Net Worth Investors”
Most telling was the #1 mistake on the li...Read More
Being ignorant is not so much a shame as being unwilling to learn.
Fear sells, and like misery it demands company. The so-called crash in August triggered dozens of hibernating bears to emerge from the woodwork. Rested from the last severe beating they took, they are ready for another healthy dose of pain. In their quest to push the fear factor a notch higher, celebrity perma-bears such as David Tice are brought out confirm that all is not well. If the markets were destine...Read More