Yearly Archives: 2017

Synthetic Stock Positions Within Registered Accounts
February 06, 2017
Bullish Outlook

Synthetic Stock Positions Within Registered Accounts

Richard Croft

As the name suggests, a synthetic stock position is equivalent to a long stock position. Similar risk reward parameters but with some structural advantages for investors who want to utilize the strategy within registered accounts.   In this column, we will focus on Canadian bank stocks. What else is new! Like it or not...

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2 years ago
Is the Extreme Bullish Speculation in Oil a Warning?
February 06, 2017
Bearish Outlook

Is the Extreme Bullish Speculation in Oil a Warning?

Patrick Ceresna

The OPEC agreement to cut production back in late 2016 ushered in a further wave of enthusiasm that pushed oil and the energy sector higher, with the belief that the oil bear market was over and long gone. Coupled with the Trump reflation trade enthusiasm, we have witnessed a very strong finish in 2016. The price of WTI oil...

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2 years ago
Impact of interest rates on the intrinsic value of options
January 31, 2017
Concepts

Impact of interest rates on the intrinsic value of options

Martin Noël

The intrinsic value of an option is the value of its premium related to changes in the underlying stock’s price compared to the option’s strike price. So the intrinsic value of a call option (IVco) is the difference between the market price of the underlying (U) and the strike (X) of the call option, while the intrinsic...

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2 years ago
Variables with an impact on the value of options
January 24, 2017
Other

Variables with an impact on the value of options

Martin Noël

You have done your homework on a stock, analyzing its fundamental and technical data, and you are bullish about its potential over the next few months. You decide to buy call options to make the most of your forecast. Over the next few weeks, the stock climbs slightly, and you see the value of your call options declining...

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2 years ago
Selecting options expiration dates : Thêta
January 24, 2017
Concepts

Selecting options expiration dates : Thêta

Montréal Exchange

Before selecting an expiration date on an option contract, it is important to review some basic concepts of option trading. Options are perishable Absolutely! Remember that the premium of an option is defined as a tangible value, determined by the relationship between the strike price and the price of the underlying stock (also...

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2 years ago
A reverse call ratio spread (call backspread) on BCE Inc. (BCE)
January 16, 2017
Bullish Outlook

A reverse call ratio spread (call backspread) on BCE Inc. (BCE)

Martin Noël

As you can see in the following graph, shares in BCE Inc. (BCE) have been trading in a range of $57 to $59 since mid-November, with points of momentum suggesting a slightly bullish trend.   Daily Graph of BCE ($58.19 on Friday, January 13, 2017) We can also see that the stochastic oscillator (the lower indicator) has begun...

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2 years ago
no-cover
January 09, 2017
Other

Writing covered calls as a hedge against a slight drop in the shares of Sun Life Financial Inc.

Martin Noël

Writing covered calls as a hedge against a slight drop in the shares of Sun Life Financial Inc. As can be seen in the following weekly chart, shares in Sun Life Financial Inc. (SLF) have broken out of a range of $35 to $45 that has characterized trading since the beginning of 2014. In principle, $45 should now be a support...

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2 years ago
Follow-up #1 – Mixed Horizontal Calendar Spread on Units of XIU
January 09, 2017
Other

Follow-up #1 – Mixed Horizontal Calendar Spread on Units of XIU

Martin Noël

  In our article dated November 28, 2016, we established a mixed horizontal calendar spread on units of XIU (the iShares S&P/TSX 60 Index ETF), looking to take advantage of relatively stable prices until the options mature on December 16, 2016.   Initial position as at November 25, 2016 (value as at December 16,...

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2 years ago
Why pay more when you can PEY less?
January 05, 2017
Bullish Outlook

Why pay more when you can PEY less?

Christopher Thom

Peyto (TSE: PEY) shares did well in 2016, rising 33.5%, as natural gas prices rose almost 64%. Natural gas accounts for 90% of Peyto’s total production volume. In my view, the shares are undervalued and could be purchased outright at this level. However, two issues arise with that idea. First, we are here to talk about...

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2 years ago
Fading the Trump Hysteria
January 05, 2017
Protection

Fading the Trump Hysteria

Patrick Ceresna

The stock markets are first and foremost a behavioral exercise. Investors are always trying to price in the future – 6 to 9 months in advance. To put that statement into perspective, one must recognize that the market is therefore driven by perceptions and assumptions more than it is about realized certainties. That...

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2 years ago