Yearly Archives: 2016
Gold Covered Straddles
Richard Croft
I talked about gold… reluctantly, back in February. I also read with interest comments from Patrick Ceresna who, also in February, penned a two-part thesis on why gold should move higher. And Patrick provided some strategies for investors to take advantage of his bull case which, I might add, have paid off handsomely. I also...
Stepping Into Energy
Richard Croft
Is the energy market becoming energized? It is a tough question laden with ambiguity. Evidenced by reams of well thought out research where slight changes in the inputs can shift the bias from bull to bear and back again. Interesting the foundation for most of the research concentrates on output. How much supply OPEC and...
Evaluating Earnings Variability
Richard Croft
We often hear about the expected movement in a stocks’ share price based on an upcoming earnings release. Calculated as an implied trading range by reverse engineering the option pricing formula. Traders typically use some version of the Black Scholes option pricing model to calculate the theoretical fair value for a call and...
Hedging Hope
Patrick Ceresna
Those that regularly follow my articles and forecasts can easily ascertain that I am a worry wart. Fortunately, or unfortunately I am always skeptical on overly optimistic views on stocks and the economy. So what am I skeptical on now? I am skeptical on the supposed turn around in the Canadian economy. Yes, things have improved...
A Bombardier Covered Straddle
Richard Croft
There is little doubt that Bombardier (TSX: BBD.B, Friday’s close $1.62) is on life support. At issue is the diagnosis. Does the company follow in the footsteps of Blackberry to survive as a shadow of its former self? Or does the company collapse under a mountain of debt and litigation in much the same way as Nortel?...
What is a Reasonable Rate of Return?
Richard Croft
There has been a lot of debate lately about the expected long term performance of equity markets. It comes down to a simple question; what is a reasonable rate of return? To paraphrase Bob Dylan, the numbers; they are a changing! Ask most investors and they will tell you that double digit returns are possible, if not probable....
Has the Tide Turned for the Canadian Economy?
Patrick Ceresna
The last two months have dynamically changed the narrative toward the Canadian economy. Over those two months, the markets have substantially shifted, including: 15% rise in the Canadian Dollar from its $0.68 lows to its current levels around $0.78. 27% rise in oil prices from their lows below $30.00 to around $38.00 today. 16%...
Generating Income With a Limited Risk
Jason Ayres
Selling or writing options can be a great way to generate cash flow as a compliment to a diversified investment approach. In general, the strategy involves selling a call or a put and getting paid to take on the obligation to either deliver or purchase the underlying shares at the strike price agreed upon. The objective of the...
Volatility’s Impact When Hedging Market Exposure
Richard Croft
Volatility represents the underlying stock price fluctuation, not the price trend. The degree of fluctuation can vary whether a stock’s price trend is bullish and advancing, bearish and declining, or remains in a steady range over time. Historical volatility can be calculated based on a stock’s actual past trading...
Will Gold Glitter Again – Part II
Patrick Ceresna
With gold having a strong start to the year and a solid 20% off its 2015 lows, the bulls vs. bear’s arguments have taken center stage. Let’s review both arguments. Bear Case for Lower Gold Gold is an inflation hedge and performs poorly in deflationary times. The most commonly referenced example is the 20-30% decline in gold...
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