Yearly Archives: 2017

Covered Calls and Gold                        –                               A Perfect Match
September 18, 2017
Risk Management

Covered Calls and Gold – A Perfect Match

Hans Albrecht

This is a fairly consistent rule in listed options markets: As assets rise in value, option pricing tends to pull back on a relative basis. As markets push higher, investors are deemed to be less fearful and therefore the cost to insure a portfolio against a market drops. We see this rule routinely play out in the VIXC (the...

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2 years ago
Unintended Consequences of Systematic Covered Call Writing
September 07, 2017
Concepts

Unintended Consequences of Systematic Covered Call Writing

Patrick Ceresna

Enhancing income and returns through covered call writing has become one of the most common strategies being adopted by investors.  Arguably selling calls against shares and ETFs is considered a conservative strategy that almost any Canadian retail investor can access, in and out of their registered accounts. While many...

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2 years ago
Options Brief-Week of August 28
August 30, 2017
Bullish Outlook

Options Brief-Week of August 28

Montréal Exchange

Everyone looks forward to something for different reasons. When investors choose to invest in a company, they will wait impatiently for the most crucial announcement: earnings season. Last week, Royal Bank of Canada (TSX:RY) reported a strong third quarter which led to a dividend hike of 5 per cent to 91 cents per share. This...

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2 years ago
Embracing Volatility on a Canadian Disruptor
August 28, 2017
Volatility

Embracing Volatility on a Canadian Disruptor

Jason Ayres

Fewer topics have been more hotly debated in political (and social) circles then the legalization of marijuana.  Now despite which direction your moral compass points on this, it’s an industry that is here to stay.  In an economic environment where governments continue to look for new ways to get into our pockets, it is no...

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2 years ago
Mixed Long Condor Spread on Shares in Dollarama Inc.
August 28, 2017
Technical analysis

Mixed Long Condor Spread on Shares in Dollarama Inc.

Martin Noël

As the following graph shows, the price of shares in Dollarama Inc. have just created a brief trough at $118.81 after having peaked at $132.34 in June 2017. Recently the stock has stayed within this range, closing at $123.80 on August 22, 2017. Over the next few weeks, $125 may act as a resistance level and $120 may be a...

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2 years ago
Buyers of Options Can Face an Uphill Climb
August 16, 2017
Volatility

Buyers of Options Can Face an Uphill Climb

Hans Albrecht

S&P/TSX 60 (“the Index”) options are generally priced a little too high versus actual market movement. In other words, many buyers of insurance will pay more than ‘fair value’ for options in order to protect against drawdowns and volatile market environments. Based on an ongoing measure of realized volatility, or...

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2 years ago
Writing Calls Covered by Long-Term Call Options on CM Shares
August 11, 2017
Technical analysis

Writing Calls Covered by Long-Term Call Options on CM Shares

Martin Noël

As the following graph shows, share prices for Canadian Imperial Bank of Commerce (CM) peaked in February 2017, after which they fell by almost 15% to settle at around $104. Since then, CM is up slightly and trying to break through $110, but this resistance level may be difficult to breach, since it was a support level in...

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2 years ago
Options Brief – Week of August 7th
August 08, 2017
Stock Options

Options Brief – Week of August 7th

Montréal Exchange

The Canadian marijuana market is preparing for a major development: the legalization of recreational use of cannabis. While some may think that legalization will boost the Canadian economy, others believe that marijuana stocks are simply overhyped.   One of the largest Canadian marijuana stocks company, Canopy Growth...

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2 years ago
Hedging Canadian Bank Risk with Debit Spreads
August 01, 2017
Protection

Hedging Canadian Bank Risk with Debit Spreads

Patrick Ceresna

The recent hawkish shift and rate hike by the Bank of Canada has ushered in a resounding 10% rise in the Canadian dollar in a few short months.  This has not only put stress broadly on Canadian equities, but it has instilled concerns about the tightening of credit conditions on an already over indebted Canadian consumer....

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2 years ago
Options Brief- Week of July 31st
August 01, 2017
Index Options

Options Brief- Week of July 31st

Montréal Exchange

The rallying markets have led to a large pool of investors accumulating unrealized gains on their portfolio. One may believe that now is a good time to cash in a profit, but investors may wish to hold on to their stocks just a little longer if they are receiving a healthy dividend payment from these holdings or wish to avoid...

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2 years ago