no-cover
January 06, 2014
Other

New Year Optimism?

The North American economies got an early Christmas present when, in uncharacteristic fashion, cooperative efforts in Washington took the debt debate off the table and pressured some high profile programmers to fix the healthcare.gov website on time. Newly appointed Federal Reserve (Fed) Chairman Janet Yellen eased into power...

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10 years ago
no-cover
December 16, 2013
Other

Bond Risk

We are witnessing a major shift in risk allocation across asset classes. As the bond market prices in tapering, medium and longer term rates are rising. With short term rates at or near zero, and likely to remain there for some time, the yield curve is steepening. As these price adjustments work their way through the system, we...

2064
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10 years ago
no-cover
December 09, 2013
Other

Could the Economy be Better than Expected?

Let’s assume for a moment that the North American economies are performing better than expected. Not a real leap considering that most analysts think the broader North American economy is walking on air, with looming US debt ceiling and sequestration debates and their fast approaching January 15th deadlines notwithstanding....

1822
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10 years ago
no-cover
November 25, 2013
Other

Covered Calls on Gold Stocks?

It’s been some time since I talked about gold. Not surprising since I am anything but a gold bug. But when you look at where some of the premier Canadian gold stocks are trading, even the most avid non-believer has to take a second look. Not that I recommend buying the miners in search of a turnaround, but as covered call...

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10 years ago
no-cover
November 11, 2013
Other

Following Up On Previous Trade Ideas

Just getting back from holidays makes this a great time to do some follow up on past trade ideas. Most notable among them being the calendar spread on Suncor (See “Calendar Spreads Trough October” – Sept 30–2013). The suggestion was to sell the Suncor November 38 call at 75 cents while simultaneously buying the...

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10 years ago
no-cover
October 21, 2013
Other

A Review of the Implied Trading Range

The price of an option reflects the markets best guess about future volatility. How much the underlying stock is expected to vary from its current price! It’s a fact lost on most traders, who buy calls if they are bullish or puts if they are bearish. But being right about whether the underlying stock will rise or fall...

1829
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10 years ago
no-cover
October 15, 2013
Other

Option Strategies when you lack Conviction

Will markets ever get beyond political headlines and other self-inflicted emergencies? Without conviction, we will continue to see directionless markets propelled by emotions. So far we have escaped mass hysteria, which explains why there have been no sustained spikes in volatility. Clearly traders’ lack of conviction has...

1524
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10 years ago
no-cover
October 08, 2013
Other

Snapshots from the Edge

I have always believed that a picture is worth a 1,000 words. It certainly makes life easier for writers, allowing them to explain so much more with so little input. Two charts come to mind. The first was on my OED presentation but does not show up on the presentation that can be downloaded from this blog. That chart compared...

1560
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10 years ago
no-cover
September 30, 2013
Other

Calendar Spreads Through October

Calendar spreads allow traders to take advantage of time value decay; the only mathematical certainty in the options market. Options have a limited life and the premium that one pays to buy or receives when selling is made up 1) time value and 2) intrinsic value. Intrinsic value represents the in-the-money amount of the...

1541
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10 years ago
no-cover
September 23, 2013
Other

A Fed Full of Surprises

Last week we saw something that we haven’t seen in some time: a market that completely misread the actions of the Federal Reserve (Fed)! This is particularly noteworthy in that Fed Chairman Bernanke has been a proponent of transparency, preferring to telegraph his intent to the market long before action is taken. That changed...

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10 years ago
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