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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3 years 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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3 years 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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3 years 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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4 years 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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4 years 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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4 years 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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4 years ago
Writing Call Options to Protect a Position  
July 09, 2019
Protection

Writing Call Options to Protect a Position  

As the following graph shows, shares in the Bank of Montreal (BMO) has been in correction territory since falling below the 13 and 34-day moving averages. The stock’s last rally toward $101 is similar to one near the end of November 2018, just before the stock plummeted by almost 14% in the space of a few weeks. Furthermore,...

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4 years ago
Profit from an Increase in Canadian Building Permits
June 05, 2019
Concepts

Profit from an Increase in Canadian Building Permits

In this article, we analyze changes in Canadian building permits in relation to fluctuations in the price of Richelieu Hardware Ltd. (symbol: RCH) for the period from January 2014 to May 2019. RCH is an importer, distributor and manufacturer of specialty hardware and complementary products. The company’s main source of...

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4 years ago
Writing Put Options on a Support Level
May 16, 2019
Concepts

Writing Put Options on a Support Level

As the following chart shows, the price of shares in George Weston Limited (WN) is down slightly from its recent high of $102.30, and it could stabilize at a support level of around $98.00. This is close to the current level of its 34-day moving average (on April 29, 2019). Furthermore, we can see that the stock’s RSI 5...

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4 years ago
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