Introduction: I have been trading stocks for over 40 years. And yet mistakes are often made despite the years of experience. Just when one thinks things are going fine, something happens that humbles the trader. It is with this background that I relate a recent trading experience as a lesson we can all learn from. Background of the trade: Earlier in the year the stock Red Hat, Inc. (RHT) was traded for a 28% profit (as shown on the Fusion Track record at RadioActiveTrading.com). But after a market sell off it looked like a market opportunity to re-enter the position. RHT was purchased on 3/28/2018 for $145. A put option was also purchased following the rules in The Blueprint to create a Married Put for safety. RHT rose soon after the purchase into the 150’s and then shot up to the 160’s. The put was sold as it still had…
Tag: stock insurance
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…
Gilead (GILD) War Story: I Learned A Trading Lesson On This One
Several months ago I purchased Gilead Sciences (GILD) in my married put Fusion account. This is an investor war story about this position and some lessons I’ve learned as a result of doing a regular quarterly review of my holdings. But before I get into the lessons learned, I need to share some background information that led up to the purchase in the first place. During the December 2015 to January 2016 time period the entire Biotechnology sector was under pressure and most stocks in the sector declined. But February 2016 brought some stability and consolidation. During the February to March period, volatility declined, Bollinger Bands narrowed, and MACD turned positive. I thought, It was clearly time to consider
Stock Insurance OR Portfolio Insurance – Revisited
With the addition of new and interesting securities to help hedge a stock portfolio, the question arises more and more: ‘Is it better to insure my stock directly or use a different hedge to insure my portfolio?’ This is a very important question which has many components to it. During a PowerOptions Open Forum Webinar on January 14th, 2014 this question was posed. The actual question was: