Risk Management

Writing covered call options to generate more income
September 23, 2020
Concepts

Writing covered call options to generate more income

Martin Noël

With interest rates currently at all-time lows, finding ways to generate income in our security portfolios is a challenge. However, the strategy of writing covered call options (WCCO), whether applied systematically or on an ad hoc basis, allows us to generate additional income through the premiums received. This is the third...

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2 days ago
Selling your securities by writing covered call options
August 24, 2020
Concepts

Selling your securities by writing covered call options

Martin Noël

Let us say you are willing to sell some securities in your portfolio, or you are considering it. Adopting the covered call writing strategy is like getting paid for making a commitment to sell the securities. This is the second in a series of four articles on covered call writing. It discusses how to use this strategy as an...

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1 month ago
Writing covered call options: an introduction
August 17, 2020
Concepts

Writing covered call options: an introduction

Martin Noël

Perhaps you would like to start using options, but you do not know which strategy to implement. The simplest and most popular strategy among individual and institutional investors is covered call writing. This article is the first in a series of four articles on covered call writing. It covers the basic features of this...

633
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1 month ago
Using USX options to hedge U.S. dollar risk
August 11, 2020
Concepts

Using USX options to hedge U.S. dollar risk

Martin Noël

With interest rates at historic lows, it is unlikely that the Bank of Canada will decide to raise the policy rate anytime soon. But we live in a world that is full of surprises, and things can change quickly. Events with the most unexpected repercussions can and do occur (the current pandemic comes to mind). Who really knows...

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2 months ago
Using options in times of market uncertainty
July 07, 2020
Bearish Outlook

Using options in times of market uncertainty

Martin Noël

In times of market uncertainty like we are seeing now, many investors turn to options for the protection they can provide. Although the markets have recouped a good portion of their losses of the past few months, we cannot rule out another plunge that could test the depths of the recent decline. The high volatility in today’s...

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3 months ago
Trading your First Option
May 26, 2020
Concepts

Trading your First Option

Martin Noël

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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4 months ago
Understand the “Rule of 16”
April 23, 2020
Concepts

Understand the “Rule of 16”

Steve Sosnick

Professional options traders are really good at dividing and multiplying by 16.  That seems like a weird skill, but it is a crucially important one for anyone who wants to fully understand the terminology used in options markets.  No matter how you utilize options, the “Rule of 16” is critical for analyzing volatility,...

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

Reduce the Risk Associated with Time Value Decay

Martin Noël

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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7 months ago
Trading Weekly Options on Canada Goose Holdings Inc (GOOS.TO)
January 28, 2020
Neutral Outlook

Trading Weekly Options on Canada Goose Holdings Inc (GOOS.TO)

Mehra Wealth Management Group

Just as a follow up to our block trade on Canada Goose Holdings Inc (GOOS) from November 14, 2019,  the January 17, 2020 $46 strike call options have expired worthless, since the stock traded out-of-the money at market close. Effectively, we have captured the full option premium of $4.31/share and our cost is now reduced to...

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

Hedging with Delta

Martin Noël

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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9 months ago
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