5 Potential Canadian Market Surprises for 2018
What better way to wrap up the 2017 year than with a market forecast. As a trader, I always look at a forecast as establishing a baseline from which to build investment themes for the upcoming year. The obstacle however, lies in that there is substantial herding in economic forecasting and rarely does an analyst stick their...
Bulling the Market with a Ratio Call Spread
Investors have had a good run over the last two months as we have seen the Canadian TSX 60 index roar higher 9% from a September low of 877.00 to its highs near 955.00. The question on everyone’s mind – is it over or is there more room to go? Is it too late to buy or should an investor wait on the sidelines for a...
Unintended Consequences of Systematic Covered Call Writing
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...
Hedging Canadian Bank Risk with Debit Spreads
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....
Bottom Fishing Cenovus? Hedging may be Appropriate
Cenovus stirred up the Canadian oil industry back on March 29th with an announcement on the $17.7 billion-dollar purchase of ConocoPhillips’ Canadian oil sand assets. To say the deal was not well received is an understatement as the stock dropped over 10% on the announcement and continued to actively distribute lower. From...
Peak Optimism Weighing on Canadian Banks
Reflecting on the last 9 months, we can decisively identify the global reflation trade as the primary driver of the equity rally. This was considerably accelerated by the Republican sweep in the U.S. elections driven by expectations of new growth driven by tax cuts and fiscal spending. During that roaring bull advance, it was...
Is the Extreme Bullish Speculation in Oil a Warning?
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...
Fading the Trump Hysteria
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...
“Buying the Dip” on REITs
It is incredible to have witnessed what has transpired in the month of November 2016. Trump’s victory has spurred a complete 180 degree turn in macro thinking. Some of the great macro men like Ray Dalio, Stanley Drunkenmiller and Jeffery Gundlach have discussed what is now openly believed to be a new growth and inflation...
Using Options for Hedging Market Cycles and Tail Risks
There are many signs suggesting that the current economic business cycle, debt cycle and market cycle are in the mature to late stages. In traditional manner, there will eventually be a peak to trough correction that will play out no different then any other time in the past. As we approach the inevitable, the buy and hold,...
Patrick Ceresna
Derivatives Market Specialist
Big Picture Trading Inc.
124 posts
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