Stock Options

Stock Repair Strategy Using Options
July 30, 2020
Bearish Outlook

Stock Repair Strategy Using Options

Patrick Ceresna

The coronavirus crisis seemed to come out of nowhere. It caught retail and professional investors off guard equally. Almost overnight many stocks fell by more than 25%, and although some have managed to recoup their losses over the past few months, many have not. What is an investor to do in such an environment? One could...

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2 months ago
Harvesting Premium By Shorting Out-of-the-money Calls
July 30, 2020
Bearish Outlook

Harvesting Premium By Shorting Out-of-the-money Calls

Patrick Ceresna

Have you ever been in the fortunate position of holding a stock that had rallied a long way, but you were concerned it had gone too far too fast, yet you did not want to sell your position? Or, have you ever thought that the market would go sideways for a while, and you did not expect your stocks to rally? Maybe you have seen...

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2 months ago
A Twist on Risk Reversals
July 10, 2020
Bullish Outlook

A Twist on Risk Reversals

Patrick Ceresna

The past few months have been challenging for investors. During the first month of the coronavirus crisis, the stock market fell from record highs with unprecedented speed. Meanwhile, the subsequent rally has been just as befuddling to many. Canada’s most liquid stock index ETF, the XIU, plunged from $27 to $17 (a loss of...

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3 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
Butterfly on Shopify
June 10, 2020
Concepts

Butterfly on Shopify

Patrick Ceresna

Recently the Royal Bank of Canada lost its title as our country’s most valuable company in terms of market capitalization. For two brief weeks, Shopify sat at the top of the heap.   Chart 1: Royal Bank vs. Shopify May 31, 2020 Source: Bloomberg   SHOP’s run has been a sight to behold.   Chart 2: Shopify...

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4 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
Profiting from the second-wave downturn
April 30, 2020
Bearish Outlook

Profiting from the second-wave downturn

Martin Noël

In a bear market, the lows of the first market downturn are often retested following a rally like the one we have just seen. This article examines how put options can be used to maximize the return on a bearish projection. As can be seen in the following chart, the unit price of the iShares S&P/TSX Capped Financials Index...

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5 months ago
Put-Writing Strategies in the Canadian Market
April 13, 2020
Bullish Outlook

Put-Writing Strategies in the Canadian Market

Patrick Ceresna

The coronavirus crisis has caused massive sell-offs in global equity markets throughout the world.  Canada has not been immune, and our benchmark large-cap S&P TSX 60 Index has lost over 36% from its February high.   CHART 1 – S&P/TSX60 Source: Bloomberg   A move of this magnitude from new highs to a...

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6 months ago
Making the most of volatility in these uncertain times
March 26, 2020
Bearish Outlook

Making the most of volatility in these uncertain times

Martin Noël

In our last article we discussed how to reduce the risk associated with the time-value decay of options in a directional position. Now we will take advantage of the market meltdown to discuss the implied volatility in the price of an option, how it reflects the degree of market uncertainty over future price movements in the...

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6 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
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