Click HERE to watch a 15-minute video on how the Historical Tools on PowerOptions can solve your back-testing needs! This discussion came from a Coaching Session with Bob, a PowerOptions Customer. Bob wanted to see how he could ‘…determine the best historical Delta selection for calls when buying SPY LEAPS.’ Well, the Historical Tools will help us with that. What Are The Historical Tools?: There are 3 main Historical Tools on PowerOptions: Historical Chain. Look up the Option Chain on any stock, on any date back to April 2006. You can then move forward or backwards, to see the price and criteria change day by day. Or, move from one month to the next and beyond to see the change in price. Historical Search By Symbol: Select a Strategy (in this case, Long Calls). Select a Screen date back in time and then select the Expiration Time Frame. The Historical…
Author: Michael Chupka
VXX – Thanks for the Hedgeories
Oh, those pesky Volatility Indexes, ETFs, ETNs, 2X and 3X and inverses…maybe there are too many now. But, unfortunately, it is time to say ‘VXX – Thanks for the Hedgeories’ It appears Barclay’s is shutting down VXX – iPath S&P 500 VIX Short-Term Futures ETN – on January 29th, 2019. VXZ – iPath S&P 500 VIX Mid-Term Futures ETN will also terminate. What is an ETN? An ETN is an Exchange Traded Note. Unlike an ETF, if you hold shares in an ETN it is more like holding a bond. An ETN is an unsecured debt note underwritten by an institution – in this case Barclay’s. You can buy shares of an ETN, just like you can with an ETF. But, the ETN is not invested into the asset it tracks. There are pros and cons to each, but we will save that discussion for another blog. Why Does the…
Don’t Hesitate! PowerOptions Coaching Sessions
During last Friday’s Open Discussion, I had an interesting question come in… Michael: I am interested in a 1-on-1, 15-minute coaching session to answer a few questions. Do you offer quick training calls? Yes! Trial members and subscribers can schedule Free Coaching Sessions at any time! Simply select a time that matches your schedule and fill out the basic information (or..leave it blank!). Steps to Schedule a Coaching Session: 1. Click ‘Free Coaching’ under the Home Tab. 2. Choose the time that matches your convenience (shown in Eastern US Time Zone) 3. Fill out some basic info and click Reserve Now! You are all set! Here is the snippet from the Open Discussion in response to Michael’s question: Click to Watch!
A 2018 Market Forecast
From the Desk of Ernie Zerenner: A 2018 Market Forecast At the start of a new year, it is time to reflect on last year and changes to be made in the next year. This is the time of year to make New Year’s resolutions, consider changes to your will or beneficiaries, and investment portfolios. The new year brings the opportunity to make 365 changes and 260 change opportunities to your portfolio. This weekend I tackled the last one, possible investment portfolio changes. These changes were based on several basic assumptions: Our concern is that the market may be over bought as mentioned in our last Blog article ‘Some Market Parameters to Consider Heading into 2018‘. Historically we are overdue for a 10% level correction in stock prices. With the influx of more money going into the economy from tax reform, repatriation of foreign earnings, and infrastructure rebuilding, there will…
Some Market Parameters to Consider Heading into 2018
It is year-end, and time to reflect on this year’s market activity. It certainly has been a strong up trending year for equities. And with all the very positive news currently, there is room for more gains in 2018. However, markets do not just go up forever. The markets are extended without a normal set back of 10% in some time. Is it time to be cautious? While at the library this weekend, I looked through the Value Line Survey. They had a table of some key market and economic parameters for the present vs. historical highs and lows. Some that caught my attention are listed below: Parameter Current Last Top Last Low PE on VL stocks 20.3 19.6 14.3 Dividend Yield VL 1.9 2.0 4.0 Prime Rate 4.5 4.3 3.3 AAA Corp. Bonds 3.5 3.5 5.5 Short Interest/Vol 16.8 17.9 8.6 As you can see most of the…
Part 2: Stock, or Portfolio Insurance?
Here is Part 2 of our Stock, or Portfolio Insurance? Series: Selecting the Right Put In this video we discuss which broad based ETF or Index Put to Select to Insure an overall portfolio. In Part 1 you saw that using an SPY Put option (the 250, ATM strike) was better insurance on a portfolio over buying shares of an Inverse or Leveraged ETF. However, was this the best strike selection? What about lower strike, lower cost, Out of the Money Puts? Wouldn’t puts with a higher delta, deeper In the Money perform better? This video breaks down the costs, outcomes, pros and cons of the different strikes you can use to insure a portfolio. We also give you an outline of how to analyze which put might be best to insure your portfolio. I hope you enjoy Part 2, and I look forward to your thoughts and comments!
Portfolio Insurance (2017) – Part 1: For the Stock Traders
This article is Part 1 of a series on evaluating the ways to add Portfolio Insurance if you are anticipating a market correction or market decline. Most of us are probably in more Bullish positions, based on the last 12 months performance of the market. Every week new highs are being hit, and bullish stock and option traders have been doing well. Over the last 12 months, we have seen SPX (S&P 500 index) and SPY (S&P 500 ETF) gain over 17% (SEP 13th, 2016, SPY closed at $213.23 and is currently around $250.00). During that same time period, NDX (NASDAQ 100 index) and QQQ move up 26% (SEP 14th, 2016, QQQ at $115.85 to about $146.00). Sure, there were small hiccups here and there along the way, but the extended growth has led to many pundits, gurus and other stock prognosticators warning of…
No Free Money with Special Dividend
I am sure that you’ve heard Costco Wholesale (COST) announced a special dividend of $7.00 per share, plus an additional increase of $0.05 to its regular quarterly dividend. The special $7.00 one time cash payment will be paid on May 26th, to those who are on record as owning shares on May 8th, 2017. What do we expect to happen when a special dividend is paid? Well, we expect the COST share price to fall -$7.00 to reflect the $7.00 one time payment. So, is this a Free Money investment if I were to buy an Out of the Money or At-the Money put option? Since the stock is going to fall the put would have to gain in price, correct? Even though I did not receive the dividend, my put would still gain and I would have a nice, juicy, leveraged profit…right? Not quite. In fact, not at all….
How did my option pricing lose $1.00 when there was little to no change on the stock?
Earlier today I received a call from a PowerOptions subscriber. He is the owner of a far out in time put option on MOMO and the stock was up about $0.35 in the morning (Stock MOMO, at $25.76 from $25.41 at close on FEB 14th). The put option he purchased was the 2017-JULY 30 strike. At close on FEB 14th the bid-ask spread was listed at $6.60 to $7.20 – figure a mid-point price of about $6.90. Note: A wide bid-ask spread is not uncommon for options that are far out in time and not actively traded. When he looked at his brokerage account this morning, it showed a value of $5.90, down -$1.00. But the stock had only moved up +$0.35. The delta of the put option was about -0.60, and increase of $0.35 in the underlying should have dropped the put price by only -$0.24. So, what gives?…