Protection

Delta: Assessing Probabilities Based on the Break-even price
May 07, 2017
Concepts

Delta: Assessing Probabilities Based on the Break-even price

Martin Noël

As we saw in an earlier article, delta measures how much an option’s price moves in relation to a change in the price of the underlying asset. Delta is a variable from the Black-Scholes option pricing model, and it is also used in the industry as an approximation of the probability that the option will be in-the-money at...

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2 months ago
Purchasing Put Options or Selling Call Options to Protect Oneself? (Third and Last Part)
May 02, 2017
Concepts

Purchasing Put Options or Selling Call Options to Protect Oneself? (Third and Last Part)

Martin Noël

In the two previous articles, we compared purchasing put options as a protective strategy with selling covered call options. The first article used options with monthly expirations, and the second article used options expiring after our period of analysis, from April 17, 2015 to January 22, 2016. In both cases, the analysis led...

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2 months ago
Purchasing put options or selling call options to protect oneself? (Part 2)
April 20, 2017
Protection

Purchasing put options or selling call options to protect oneself? (Part 2)

Martin Noël

In the last article, we compared purchasing put options with selling call options. We reached the conclusion that, in the absence of a known target price and timeframe, it is better to use strategies that take advantage of the decaying time value of options, such as selling call options, as protection against a decline in the...

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2 months ago
Purchasing put options or selling call options to protect oneself?
April 11, 2017
Bearish Outlook

Purchasing put options or selling call options to protect oneself?

Martin Noël

Is it better to purchase put options or to sell call options for protection against loss? Many investors ask this question but, in this as in many areas, there is no single right answer. As we have seen in earlier articles, purchasing options has one major disadvantage: the erosion of the time value that must be counterbalanced...

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3 months ago
Is the Extreme Bullish Speculation in Oil a Warning?
February 06, 2017
Bearish Outlook

Is the Extreme Bullish Speculation in Oil a Warning?

Patrick Ceresna

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...

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5 months ago
Fading the Trump Hysteria
January 05, 2017
Protection

Fading the Trump Hysteria

Patrick Ceresna

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...

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6 months ago
Using Options for Hedging Market Cycles and Tail Risks
November 01, 2016
Index Options

Using Options for Hedging Market Cycles and Tail Risks

Patrick Ceresna

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,...

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8 months ago
Gold versus Gold Stocks
June 20, 2016
Bullish Outlook

Gold versus Gold Stocks

Richard Croft

Gold has been on a tear recently. Not because of any real change in supply demand metrics. This is all about defensive positioning against a perceived devaluation of paper currency. In short gold bulls are playing the crisis insurance card… again! I am not about to tell you to buy gold. I’ve talked about it in the past but...

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1 year ago
Is it real?
May 31, 2016
Bullish Outlook

Is it real?

Richard Croft

The TSX composite index finished higher for a third consecutive day. Might have been four had Monday not been a holiday. But… is it real? Mindful that a three-day rally does not make a bull market it appears there has been a major change in sentiment. Rallying in the face of higher oil prices is a shift in sentiment. As is...

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1 year ago
Playing Defence with Cash Secured Puts?
May 16, 2016
Protection

Playing Defence with Cash Secured Puts?

Richard Croft

I have a love hate relationship with Canadian financial institutions. Canadian banks are tough competition for someone in the money management business. As an investment however, they are well capitalized – more than can be said for many European banks – and pay healthy dividends, which are bumped up on a regular basis. Or...

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1 year ago