Neutral Strategy

Low-Cost Insurance Against a Drop in Share Price
August 01, 2019
Neutral Outlook

Low-Cost Insurance Against a Drop in Share Price

Martin Noël

As the following chart shows, the price of shares in Waste Connections Inc. (WCN), which is trading at $123.70 as these lines are being written on July 25, 2019, has delivered an excellent return of 28.6% since bottoming out at $96.16 on December 24, 2018. The chart shows that the stochastic oscillator (Stoch), an indicator of...

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2 weeks ago
Taking Advantage of Time Decay With a Mixed Ratio Spread
April 16, 2018
Neutral Outlook

Taking Advantage of Time Decay With a Mixed Ratio Spread

Martin Noël

As you can see in the chart below, the price of Canadian Pacific Railway Limited (CP) stock has stayed within a range of $215 to $240 since October 2017 and $190 to $240 over the last 12 months. While the price could fall back down to $190, equal to a drop of nearly $35 from the current level ($224.16), we also believe that a...

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1 year ago
Long Call Neutral Calendar Spreads
March 14, 2018
Neutral Outlook

Long Call Neutral Calendar Spreads

Alan Grigoletto

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...

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1 year ago
A horizontal calendar spread to make the most of relatively stable prices for Air Canada shares
December 01, 2017
Neutral Outlook

A horizontal calendar spread to make the most of relatively stable prices for Air Canada shares

Martin Noël

After having peaked at $28.70 in October, the price of shares in Air Canada (AC) seems to have slipped into a short-term trough at the $22 support level. Since then, the price rallied to $26 and, as of this writing, has settled in at around $24. Prices from $22 to $28 now represent a trading range that could contain price...

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2 years ago
Three ways to build a butterfly spread
July 18, 2017
Neutral Outlook

Three ways to build a butterfly spread

Martin Noël

A butterfly spread is appropriate when you expect that the price of the underlying asset will remain relatively unchanged and reach a specific target price upon expiration of the options used in the strategy. The following graph illustrates such a situation with shares in BCE Inc., when their price fluctuated within a range of...

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2 years ago
Profiting from a Stock’s Relative Stability over a Given Period of Time
July 04, 2017
Neutral Outlook

Profiting from a Stock’s Relative Stability over a Given Period of Time

Martin Noël

There are three situations in which options can be used to take advantage of changes in the price of an underlying stock: when prices rise, when they fall, and when they enter a relatively stable period. In this article, I will examine how to benefit from a relatively stable stock price. More specifically, we will look at an...

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2 years ago