no-cover
May 26, 2020
Concepts

Trading your First Option

As an investor, the first thing you need to know is how to choose which securities to buy. The second is when to sell them. That’s pretty easy, right? In this article, you will learn how to trade your first option. As you will see, you do not need to be an expert to start trading options. You just need to be familiar with...

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1 month ago
Profiting from the second-wave downturn
April 30, 2020
Bearish Outlook

Profiting from the second-wave downturn

In a bear market, the lows of the first market downturn are often retested following a rally like the one we have just seen. This article examines how put options can be used to maximize the return on a bearish projection. As can be seen in the following chart, the unit price of the iShares S&P/TSX Capped Financials Index...

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2 months ago
Making the most of volatility in these uncertain times
March 26, 2020
Bearish Outlook

Making the most of volatility in these uncertain times

In our last article we discussed how to reduce the risk associated with the time-value decay of options in a directional position. Now we will take advantage of the market meltdown to discuss the implied volatility in the price of an option, how it reflects the degree of market uncertainty over future price movements in the...

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3 months ago
Reduce the Risk Associated with Time Value Decay
March 02, 2020
Bearish Outlook

Reduce the Risk Associated with Time Value Decay

Reduce the risk associated with time value decay In this article, we will examine how to reduce the risk associated with the time value decay of options in a directional position, as well as how this affects the strategy’s payoff profile. As can be seen in the following chart, the price of shares in BCE Inc. (BCE) have...

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4 months ago
Hedging with Delta
January 14, 2020
Bearish Outlook

Hedging with Delta

As can be seen in the following chart, the price of shares in National Bank of Canada (NA) recently peaked at $73.22, representing an increase of 21.85% in 110 days, for an annualized rate of return of 72.50%. It is unlikely that this pace of growth can be sustained over an extended period of time. In addition, there are signs...

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6 months ago
Writing covered call options to profit from a period of consolidation
December 03, 2019
Bearish Outlook

Writing covered call options to profit from a period of consolidation

As can be seen in the following graph, the price trend for shares in the Canadian National Railway Company (CNR) appears to have faltered. The stochastic oscillator indicator has just fallen below 75, much like it did in June 2019. At that time, the price of CNR stayed in a channel for many weeks. As long as the oscillator...

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7 months ago
Impact of the Exchange Rate on Our Investments in the United States
November 12, 2019
Concepts

Impact of the Exchange Rate on Our Investments in the United States

Given our proximity to the United States and/or for purposes of geographic diversification, many investors have investments in their portfolios that are priced in U.S. dollars. As with all investments, U.S. equities carry market risk, and it is important to carefully analyze securities so as to minimize, as much as possible,...

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8 months ago
Improving order execution efficiency
October 03, 2019
Stock Options

Improving order execution efficiency

On July 27, 2007, the Montréal Exchange launched a penny trading pilot project that ended on February 26, 2016 with the implementation of a permanent program. Before the pilot project began, only options priced below $0.10 were allowed to trade with a minimum price increment of $0.01 (“penny trading”), while all other...

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9 months ago
Profiting From Expectations of Relative Stability
August 20, 2019
Concepts

Profiting From Expectations of Relative Stability

Shares in Cogeco Communications Inc. (CCA) were trading at $104.36 at this writing on August 9, 2019, but as the following graph shows, they jumped on July 10 when the company released its latest financial results. After topping out at $107.05 on July 16, prices moved in a relatively narrow corridor of $103.33 to $107.35....

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11 months ago
Low-Cost Insurance Against a Drop in Share Price
August 01, 2019
Neutral Outlook

Low-Cost Insurance Against a Drop in Share Price

As the following chart shows, the price of shares in Waste Connections Inc. (WCN), which is trading at $123.70 as these lines are being written on July 25, 2019, has delivered an excellent return of 28.6% since bottoming out at $96.16 on December 24, 2018. The chart shows that the stochastic oscillator (Stoch), an indicator of...

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11 months ago
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