Trading Idea

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...

1887
0
1
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...

4687
0
2
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...

1030
0
Like
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...

1391
0
Like
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...

862
0
Like
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?...

1438
0
1
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...

707
0
1
4 years ago
The Risks of Prolonged Commodity Weakness
December 17, 2015
Trading Idea

The Risks of Prolonged Commodity Weakness

Patrick Ceresna

The Bank of Canada released its semi-annual Financial Systems Review on December 2015. Click to download the Report. While the report was comprehensive in looking at Global Macro Risks, we wanted to focus on their comments on the global commodity markets. Here is an excerpt from the report (p.27): “Risk 4: Prolonged Weakness...

752
0
Like
4 years ago