For those readers who are just beginning their options education journey, I am sure you have been presented with many opinions from other investors and investment professionals alike, regarding the value and risk that options bring to a portfolio. Unfortunately, many myths and misconceptions have arisen due to a lack of...
As the following graph shows, shares in Waste Connections Inc. (WCN) have been rallying since February 6, 2018, when they bottomed out at $81.52. As I write these lines, WCN is priced at $96.67, up 18.58%. The RSI indicator and stochastic oscillator are now in extreme overbought territory. Even though this is not, in itself, an...
In a previous posting, “Bull Call and Bear Put Spreads, Pairing Option Strategies with Forecasts” we learned how to implement a debit spread for both calls and puts. This week we will examine another form of vertical spreads: credit spreads and how they can be used. Recall that debit spreads are a limited risk transaction,...
In a recent article we discussed how to get long volatility with the Long Option Straddle. In today’s piece we will discuss another less costly way to buy volatility with the Reverse Iron Condor. Condor strategies are named for the narrow-bodied and broad-winged bird that is primarily found in California. When diagramed, the...
In a previous article, “Bull Call and Bear Put Spreads” investors learned how to construct a simple 1:1 vertical spread. This week we will discuss how a ratio spread can be implemented and the risks and benefits of this strategy. A ratio spread is similar to a vertical spread in that it involves the simultaneous purchase...
In previous submissions we’ve discussed put and call vertical spreads, “Bull Call and Bear Put Spreads”. This week Canadian investors will learn how to construct a calendar spread. The calendar spread is also known as a time spread or horizontal spread. The calendar spread is typically constructed for a neutral outlook...
As the following graph shows, the share price of Dollarama Inc. (DOL) fell $22.60, from a high of $170.00 reached on January 29 to a low of $147.40 on February 9, 2018. DOL then rallied to $158.97, right up to the level of its moving averages. Since then, the stock has been below its moving averages, and if it continues to...
After our interview with Rick Rule on MacroVoices, I was inspired to share my thoughts on options trading on natural resource companies. At the start of the interview Rick pointed out the unusually cyclical nature of resource investing. Rick went on to elaborate: “…during periods of time when mature natural resource...