Trading Idea

Playing the US Election
November 07, 2016
Trading Idea

Playing the US Election

Richard Croft

The US equity markets are re-setting some old records. At the close of trading last week, the S&P 500 composite index and the Dow Jones Industrial Average did something had declined for nine straight sessions. The last time we saw this measure of consistent bearishness was in December 1980 just before Ronald Reagan took...

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2 years ago
An Electrifying Yield on a Utility Stock
October 12, 2016
Concepts

An Electrifying Yield on a Utility Stock

Christopher Thom

Utility stocks are often loved by yield investors. They provide steady dividends, are regulated businesses, and are less cyclical. Generally they can be called “boring,” but for the investors who own utility stocks that is what they love about them. We’ve seen this sector do well over the last few decades as interest...

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2 years ago
Covered Call Horror Stories
September 13, 2016
Trading Idea

Covered Call Horror Stories

Richard Croft

In the late 1990s I sold a covered call on, let’s call the security, XYZ. A “nom de plume” to protect the guilty… or innocent, depending on your point of view. In any event, XYZ was a particularly volatile technology company trading at $21.75 per share in January 1998. I bought the shares for myself and clients and...

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3 years ago
Covered Calls versus Naked Puts
August 15, 2016
Trading Idea

Covered Calls versus Naked Puts

Richard Croft

Covered call writing is a low risk option strategy. If the underlying rises above the strike price the calls are assigned, you deliver the shares and exit with the best case scenario. Covered calls make money in a rising or flat market and because the premium received reduces the cost of the underlying shares, is less risky...

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3 years ago
The Covered Strangle is both an Income and Investment Strategy
July 29, 2016
Revenue

The Covered Strangle is both an Income and Investment Strategy

Alan Grigoletto

Canadian investors seeking an index or single stock option strategy may want to consider the covered strangle. It can be employed to enhance yield and provide a strategic means to both add to and exit existing positions. Like any options strategy there are trade-offs, and the covered strangle does pose some risk.   The...

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3 years ago
CANADA – Recession Worries!
July 27, 2016
Trading Idea

CANADA – Recession Worries!

Richard Croft

Probably the most noteworthy event in the first half of 2015 was the surprise rate cut issued by the Bank of Canada (BoC) in the first quarter. It was designed to provide “insurance against a downturn” in light of the sharp decline in oil prices. The BoC was right to be concerned. Unfortunately policymakers underestimated...

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3 years ago
Equivalent Option Positions
June 07, 2016
Trading Idea

Equivalent Option Positions

Richard Croft

In the past couple of months, I authored three commentaries talking about covered straddles. There was the blog on Bombardier (April 18, 2016), another on energy stocks (May 3, 2016) and finally one on gold stocks (May 9, 2016). I call it the double up double down approach to investing. Without re-hashing the specifics of the...

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3 years ago
Stepping Into Energy
May 03, 2016
Trading Idea

Stepping Into Energy

Richard Croft

Is the energy market becoming energized? It is a tough question laden with ambiguity. Evidenced by reams of well thought out research where slight changes in the inputs can shift the bias from bull to bear and back again. Interesting the foundation for most of the research concentrates on output. How much supply OPEC and...

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3 years ago
A Bombardier Covered Straddle
April 18, 2016
Stock Options

A Bombardier Covered Straddle

Richard Croft

There is little doubt that Bombardier (TSX: BBD.B, Friday’s close $1.62) is on life support. At issue is the diagnosis. Does the company follow in the footsteps of Blackberry to survive as a shadow of its former self? Or does the company collapse under a mountain of debt and litigation in much the same way as Nortel?...

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3 years ago
Belated Resolutions for the New Year
February 01, 2016
Trading Idea

Belated Resolutions for the New Year

Richard Croft

I don’t usually make New Years’ resolution because I rarely keep them. But in my world there are times where you need to reassess how to best deal with the operational aspects of trading options. Unfortunately these reassessments are usually the result of costly mistakes. Resolution 1: Avoid expiration nightmares! Always...

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3 years ago