Stock Options

Considering a Long Call Position in Air Canada
November 16, 2020
Bullish Outlook

Considering a Long Call Position in Air Canada

Patrick Ceresna

The COVID crisis has been especially hard on airline stocks. The stock price of Canada’s largest airline, Air Canada, collapsed from over $50 in January to $10 in March.  Although the stock has recovered somewhat since then, when compared to other equities the bounce has been anemic. Chart 1: Air Canada (symbol AC) over past...

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3 weeks ago
There’s no free lunch in the market…but is there?
November 10, 2020
Other

There’s no free lunch in the market…but is there?

Richard Ho

“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...

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3 weeks ago
Choosing a Call Option Strike Price to Optimize Return
October 23, 2020
Bullish Outlook

Choosing a Call Option Strike Price to Optimize Return

Martin Noël

Are you expecting the price of a security to rise, and you have a target price in mind? In this article, you will learn how to choose the right strike price to optimize your return if the security reaches your target price by the time your call option expires. Analysis of Descartes Systems Group Inc. (DSG) In this article, we...

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1 month ago
Let’s do some exercise: Exercising your options
October 13, 2020
Bullish Outlook

Let’s do some exercise: Exercising your options

Richard Ho

In this article, we’ll talk about exercising call options and why investors would want to do so. Read the article to find out the pros and cons of exercising a call option. You discover a pharmaceutical company that trades at $100 a share and has a COVID-19 vaccine in phase 3 clinical testing. It’s extremely promising, but...

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2 months ago
Filling the Gap with a Long Call Spread
October 09, 2020
Bullish Outlook

Filling the Gap with a Long Call Spread

Patrick Ceresna

During the COVID crisis the stock market declined, but energy stocks were particularly hard hit as the price of oil plunged to levels never before seen.  During the panic selling, one of Canada’s largest energy companies, Suncor Energy (ticker SU) left a gap from $33.52 to $30.19. (A down gap is where the price opens on the...

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2 months ago
Cash-Secured Put Writing on the iShares S&P/TSX Capped Energy ETF
October 05, 2020
Bullish Outlook

Cash-Secured Put Writing on the iShares S&P/TSX Capped Energy ETF

Patrick Ceresna

Although the broad Canadian stock market index has almost recovered to its pre-COVID crisis high, there is one sector that has lagged badly.  The energy sector has not recovered to anywhere near the levels seen in early 2020. Chart 1: iShares S&P/TSX Capped Energy ETF (symbol XEG) 2019-2020 Source: Bloomberg For those who...

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2 months ago
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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4 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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4 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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5 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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5 months ago
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