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Your Price Is Way Too High: You Need to CUT IT
Montréal Exchange
Consumers just don’t want to pay full price for anything. There’s always a better deal somewhere out there, or an annual sale just around the corner. As a disciplined consumer, you know how to put the items that you like on your “Wish List” and patiently wait for a sale. This approach can be applied to trading as...
Covered Call on West Fraser Timber
Patrick Ceresna
There is nothing more Canadian than lumber stocks. On the institutional desks, traders often refer to them as trading the “trees.” And no stock is more iconic than West Fraser Timber (symbol WFT). During the March COVID panic, the price of West Fraser fell more than 65%, from a high of $65.11 to a low of $21.60. Chart...
There’s no free lunch in the market…but is there?
Montréal Exchange
“There ain’t no such thing as a free lunch.” This old adage refers to the idea that it is impossible for anyone to get something for nothing. Even if something is free, someone somewhere is paying for it. However, investors have the choice to either accept a price or not, that is why we have limit orders. Imagine if...
Catching up on what you missed during our Virtual Options Education Day event
Montréal Exchange
The Canadian options market is vibrant and offers options on over 300 of TSX’s most active and liquid stocks and ETFs. Retail investors who understand how to combine stocks and options strategies have a powerful skill at their disposal. This can diversify their trading strategies to more than just going long or short....
Simplifying Complex Orders
Steve Sosnick
One of the best features of options is that they can facilitate a wide variety of strategies. Are you bullish on a stock but don’t expect a rise in volatility? Then a call or put spread might be for you. Do you expect a big move in an ETF, but don’t know which direction is more likely? Then a straddle may be the...
Currency Options University – Part 2
Patrick Ceresna
Part 2: Impact of U.S. Dollar Fluctuation on Canadian Returns I had the opportunity, early in my career, to work at a full-service brokerage at a Tier 1 Canadian bank. I remember back in the day overhearing an investment advisor having an argument with a client about the client’s performance. The client was questioning the...
The Greeks: Theta
Martin Noël
This week, we will look at another Greek variable: theta. Theta measures the change in the price of an option following a change in the time remaining to its expiration. You will recall that an option’s premium has two components: intrinsic value and time value. But since an option that has reached expiration has run out of...
Will Volatility Revert to the Mean?
Hans Albrecht
A crucial foundation for understanding how option volatility works is the concept of ‘mean reversion’. For a period, stocks can go up and stay up, and they can conversely go down and stay down. But option pricing will generally have trouble staying high or low for an extended length of time. So why do prices eventually move...
The Greeks: Delta
Martin Noël
In the last few articles, we have seen that there are several variables that have an impact on the value of options. This table illustrates how an increase in one of the variables affects the values of call and put options. As you can see, with all other things being equal, when one of the variables moves, we should expect the...
A Wall of Worry
Jason Ayres
There’s an old saying that “markets climb a wall of worry and slide down a slope of hope”. I think many would agree that although both U.S. and Canadian equities continue climb, there’s no shortage of apprehension when discussing how much further the markets can go with out some sort of a correction. One...
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