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1 month agoOption Myths and Misconceptions
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1 month agoBuying Put Options to Hedge Shares
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4 months ago5 Potential Canadian Market Surprises for 2018
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recent posts
The Da Vinci Code: The hidden messages within the option chains
Richard Ho
Traders are very opinionated and have their own view on everything. This is why we have a market of buyers and sellers. Otherwise, everyone would be on the same side of the trade. This behaviour is built over time from experience and knowledge. You can do it too. For example, you are able to tell if the stock is trending up or...
Taking Advantage of Time Decay With a Mixed Ratio Spread
Martin Noël
As you can see in the chart below, the price of Canadian Pacific Railway Limited (CP) stock has stayed within a range of $215 to $240 since October 2017 and $190 to $240 over the last 12 months. While the price could fall back down to $190, equal to a drop of nearly $35 from the current level ($224.16), we also believe that a...
Real Estate, Canadian Banks and Downside Risks
Patrick Ceresna
I want to take a dive into the most passionately debated issue of a correction in Canadian real estate and the impact on Canadian banks. The general consensus is that over the long-term home prices will continue to rise and the risks directly to the banks are limited as mortgage default risk predominantly sit with the...
Writing put options on a support level
Martin Noël
As the following graph shows, the share price of Canadian Imperial Bank of Commerce (CM) has been trending downward since the beginning of 2018. When markets closed on Friday, March 23, CM was trading at $114.07. But as we can see, a price range of $112 to $114 has represented a support level from which prices surged twice....
Strike prices and GPS
Richard Ho
One day I was driving home after work and I received a call from an old friend, Alex. We started talking about the kids and the wife but, eventually, we ended up talking about the markets. Alex has some knowledge of options, but there was one thing that he didn’t understand. He asked me, “How do you know which strike price...
Use Bid/Ask Spreads to Measure Liquidity, Not Open Interest
Tony Zhang
One question we’re often asked about our trades is why we would present ideas that have low volume and open interest. The answer might surprise you: It’s because open interest and volume are not reliable indicators of liquidity. Option liquidity is primarily a function of the underlying stock’s liquidity. Here’s why:...
Evolution, Revolution or Convolution: The Changing Landscape of Exchange Market Structure in North America
Alan Grigoletto
Bill Gates once said, “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” There is some argument as to which nation created the first exchange....
Option Myths and Misconceptions
Jason Ayres
For those readers who are just beginning their options education journey, I am sure you have been presented with many opinions from other investors and investment professionals alike, regarding the value and risk that options bring to a portfolio. Unfortunately, many myths and misconceptions have arisen due to a lack of...
