Volatility crush is among the more common but poorly understood terms used by new options investors. They mostly place irrational bets on options ahead of earnings because they do not fully understand what they are doing. These investors will take a look at a high-priced stock that is set to report earnings in the near-term and...
Before the corona crisis hit, Cineplex was scheduled to be taken over by UK-based Cineworld Group in a $1.65 billion transaction. Cineworld was going to pay $34 per Cineplex share. However, the closing of the Canadian economy due to the coronavirus crisis led Cineworld to claim that there had been a material adverse change...
The stock market has rallied a long way from the March lows. The iShares S&P/TSX Equity 60 ETF (symbol XIU) is up almost $8 from that scary day on March 23, 2020 when the market reached bottom. The rally has been steady, with few pullbacks. However, it is completely natural to expect that, eventually, there will be a...
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...
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...
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,...
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...
On March 13th, Aurora Cannabis Inc. (TSX: ACB) announced that they had appointed Nelson Peltz as a Strategic Advisor to help explore potential partnerships and advise on the company’s global expansion strategy. This is a big deal given Mr. Peltz’s business history and reputation for delivering results. For more details...
Speculation is enthusiastically running wild in the Canadian cannabis industry over the last 2 years. This has led to extraordinary volatility and gains for investors who seek a stake in the industry. For this article I will refrain from offering my opinions to the merits of this investment and rather focus on sizing up the...
Over the last few years I have not been shy about my conviction that the gold bear market has ended. There is no denying that the December 2015 lows for gold bullion at $1050.00 are now history, but the enthusiasm for the shiny metal has been left for the diehards as most of the speculative money has turned its attention to...