Stock options

Using call options as a hedge
May 16, 2018
Protection

Using call options as a hedge

Martin Noël

As can be seen in the following chart, the share price of ONEX Corporation (ONEX) has been weak enough to suggest that some caution may be necessary. The Relative Strength Index (RSI), which was recently in oversold territory, is trending downward. The same is true of the stochastic oscillator (%K). Although the scope of the...

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2 weeks ago
Tips for Trading Your First Option
May 02, 2018
Concepts

Tips for Trading Your First Option

Tony Zhang

Learning how to trade options takes time and patience. Luckily, there are plenty of courses and tools to help investors through this process. Selling covered calls for income is a great way to dip your toes into the options market, before moving onto buying calls and puts. We will examine these 2 primary strategies that are...

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4 weeks ago
A Bullish Position to Optimize Risk-Reward
April 25, 2018
Bullish Outlook

A Bullish Position to Optimize Risk-Reward

Martin Noël

As the following graph shows, shares in Royal Bank of Canada (RY) veered into correction territory after peaking at $108.52 on January 22, 2018. At the current price of $97.98, the security is down by over 9.7%. With the RSI (Relative Strength Index) indicator on the rise and the stochastic oscillator (%K) indicating that the...

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1 month ago
Option Trading Mistakes to Avoid
April 25, 2018
Concepts

Option Trading Mistakes to Avoid

Jason Ayres

Trading and investing for ones self is challenging at best, let alone when you are making mistakes that could have been avoided. I am of course speaking from experience as I have paid my share of tuition thanks to falling victim to a few of the following blunders. Using an all-purpose strategy Options can be used under a...

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1 month 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 month ago
Real Estate, Canadian Banks and Downside Risks
March 28, 2018
Risk Management

Real Estate, Canadian Banks and Downside Risks

Patrick Ceresna

I want to take a dive into the most passionately debated issue of a correction in Canadian real estate and the impact on Canadian banks.  The general consensus is that over the long-term home prices will continue to rise and the risks directly to the banks are limited as mortgage default risk predominantly sit with the...

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2 months ago
Writing put options on a support level
March 27, 2018
Bullish Outlook

Writing put options on a support level

Martin Noël

As the following graph shows, the share price of Canadian Imperial Bank of Commerce (CM) has been trending downward since the beginning of 2018. When markets closed on Friday, March 23, CM was trading at $114.07. But as we can see, a price range of $112 to $114 has represented a support level from which prices surged twice....

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2 months ago
Strike prices and GPS
March 26, 2018
Concepts

Strike prices and GPS

Richard Ho

One day I was driving home after work and I received a call from an old friend, Alex. We started talking about the kids and the wife but, eventually, we ended up talking about the markets. Alex has some knowledge of options, but there was one thing that he didn’t understand. He asked me, “How do you know which strike price...

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2 months ago
Use Bid/Ask Spreads to Measure Liquidity, Not Open Interest
March 22, 2018
Concepts

Use Bid/Ask Spreads to Measure Liquidity, Not Open Interest

Tony Zhang

One question we’re often asked about our trades is why we would present ideas that have low volume and open interest. The answer might surprise you: It’s because open interest and volume are not reliable indicators of liquidity. Option liquidity is primarily a function of the underlying stock’s liquidity. Here’s why:...

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2 months ago
Evolution, Revolution or Convolution: The Changing Landscape of Exchange Market Structure in North America
March 22, 2018
Concepts

Evolution, Revolution or Convolution: The Changing Landscape of Exchange Market Structure in North America

Alan Grigoletto

Bill Gates once said, “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” There is some argument as to which nation created the first exchange....

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2 months ago