Strategy
There’s no free lunch in the market…but is there?
Montréal Exchange
“There ain’t no such thing as a free lunch.” This old adage refers to the idea that it is impossible for anyone to get something for nothing. Even if something is free, someone somewhere is paying for it. However, investors have the choice to either accept a price or not, that is why we have limit orders. Imagine if...
Cash-Secured Put Writing on the iShares S&P/TSX Capped Energy ETF
Patrick Ceresna
Although the broad Canadian stock market index has almost recovered to its pre-COVID crisis high, there is one sector that has lagged badly. The energy sector has not recovered to anywhere near the levels seen in early 2020. Chart 1: iShares S&P/TSX Capped Energy ETF (symbol XEG) 2019-2020 Source: Bloomberg For those who...
Long Straddle with Cineplex
Patrick Ceresna
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...
Bear Call Spread in the XIU Market
Patrick Ceresna
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...
Stock Repair Strategy Using Options
Patrick Ceresna
The coronavirus crisis seemed to come out of nowhere. It caught retail and professional investors off guard equally. Almost overnight many stocks fell by more than 25%, and although some have managed to recoup their losses over the past few months, many have not. What is an investor to do in such an environment? One could...
Harvesting Premium By Shorting Out-of-the-money Calls
Patrick Ceresna
Have you ever been in the fortunate position of holding a stock that had rallied a long way, but you were concerned it had gone too far too fast, yet you did not want to sell your position? Or, have you ever thought that the market would go sideways for a while, and you did not expect your stocks to rally? Maybe you have seen...
Put-Writing Strategies in the Canadian Market
Patrick Ceresna
The coronavirus crisis has caused massive sell-offs in global equity markets throughout the world. Canada has not been immune, and our benchmark large-cap S&P TSX 60 Index has lost over 36% from its February high. CHART 1 – S&P/TSX60 Source: Bloomberg A move of this magnitude from new highs to a...
Reduce the Risk Associated with Time Value Decay
Martin Noël
Reduce the risk associated with time value decay In this article, we will examine how to reduce the risk associated with the time value decay of options in a directional position, as well as how this affects the strategy’s payoff profile. As can be seen in the following chart, the price of shares in BCE Inc. (BCE) have...
Shares in Uranium Participation Corp are trading at a discount
Patrick Ceresna
Uranium Participation Corporation (Symbol U on the TSX exchange) is a company that invests in uranium. Uranium presents an attractive investment opportunity at this time. The commodity itself is currently trading at below the cost of production for most miners, a situation that cannot continue indefinitely. Eventually companies...
Trading Weekly Options on Canada Goose Holdings Inc (GOOS.TO)
Mehra Wealth Management Group
Just as a follow up to our block trade on Canada Goose Holdings Inc (GOOS) from November 14, 2019, the January 17, 2020 $46 strike call options have expired worthless, since the stock traded out-of-the money at market close. Effectively, we have captured the full option premium of $4.31/share and our cost is now reduced to...
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