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Worries About the Fed and Earnings Grew as 2022 Ended: December Recap
Stocks begin the New Year under a cloud of pessimism as investors brace for higher interest rates and lower earnings. The S&P 500 slid 5.9 percent in December, resulting in a 19 percent drop for all of 2022. It was the stock market's worst year since the 2008...
Rolling Options: Key Things for Traders to Know
Editor's note: This post was originally published on Wednesday, December 23, 2020. "Rolling options" is a common transaction for options traders, but there are several ways to do it. This article will explain the different ways and reasons why traders might roll...
Key Points About Selling Credit Spreads
A previous post covered debit spreads, when you pay a debit looking for a stock or ETF to move in a certain direction. Credit spreads are just the opposite, with traders collecting premium up front in hope that the stock won't move a certain way. What a Credit Spread...
Greek of the Week: Gamma
Editor’s note: This post, part of a four-part series about options Greeks, was originally published on Monday, August 20, 2018. We previously looked at delta. Delta measures how much an option changes in price when the underlying stock or ETF fluctuates. Calls...
Greek of the Week: Theta
Editor’s note: This post, part of a four-part series about options Greeks, was originally published on Tuesday, August 28, 2018. So far, we’ve looked at delta and gamma. This week, we’ll turn to theta. Theta: T is for “time decay.” Theta measures how...
Greek of the Week: Vega
Editor’s note: This post, part of a four-part series about options Greeks, was originally published on Tuesday, September 4, 2018. So far we’ve reviewed three options “Greeks,” with memory tricks for keeping them straight: Delta: D is for direction.Gamma: G is for...
The Basics of Options
Options are an important tool for many retail investors. They can either replace trading shares, or make it easier to position oneself in stocks. Let's consider the first things options traders need to know. An Option's Price Is Usually Called 'Premium' There are some...
The Structure of Options Trades
While options can be traded by themselves, investors often use them in conjunction with other securities. So before going further, let's consider the four basic ways that options trades are structured. You Can Trade Options by Themselves As we learned in a previous...
Buying and Selling Options
Most clients understand buying and selling stocks. Options are similar, and can be traded in the same brokerage accounts. However, you should know some basic differences. Bid / Ask Spreads Matter A bid/ask spread is the difference between where you can sell a security...
Worries About the Fed and Earnings Grew as 2022 Ended: December Recap
Stocks begin the New Year under a cloud of pessimism as investors brace for higher interest rates and lower earnings. The S&P 500 slid 5.9 percent in December, resulting in a 19 percent drop for all of 2022. It was the stock market's worst year since the 2008...
Rolling Options: Key Things for Traders to Know
Editor's note: This post was originally published on Wednesday, December 23, 2020. "Rolling options" is a common transaction for options traders, but there are several ways to do it. This article will explain the different ways and reasons why traders might roll...
Key Points About Selling Credit Spreads
A previous post covered debit spreads, when you pay a debit looking for a stock or ETF to move in a certain direction. Credit spreads are just the opposite, with traders collecting premium up front in hope that the stock won't move a certain way. What a Credit Spread...
Greek of the Week: Gamma
Editor’s note: This post, part of a four-part series about options Greeks, was originally published on Monday, August 20, 2018. We previously looked at delta. Delta measures how much an option changes in price when the underlying stock or ETF fluctuates. Calls...
Greek of the Week: Theta
Editor’s note: This post, part of a four-part series about options Greeks, was originally published on Tuesday, August 28, 2018. So far, we’ve looked at delta and gamma. This week, we’ll turn to theta. Theta: T is for “time decay.” Theta measures how...
Greek of the Week: Vega
Editor’s note: This post, part of a four-part series about options Greeks, was originally published on Tuesday, September 4, 2018. So far we’ve reviewed three options “Greeks,” with memory tricks for keeping them straight: Delta: D is for direction.Gamma: G is for...
The Basics of Options
Options are an important tool for many retail investors. They can either replace trading shares, or make it easier to position oneself in stocks. Let's consider the first things options traders need to know. An Option's Price Is Usually Called 'Premium' There are some...
The Structure of Options Trades
While options can be traded by themselves, investors often use them in conjunction with other securities. So before going further, let's consider the four basic ways that options trades are structured. You Can Trade Options by Themselves As we learned in a previous...
Buying and Selling Options
Most clients understand buying and selling stocks. Options are similar, and can be traded in the same brokerage accounts. However, you should know some basic differences. Bid / Ask Spreads Matter A bid/ask spread is the difference between where you can sell a security...
Breakout or Breakdown? Investors Brace for Inflation After Scary Comments on the Economy
Negative headlines battered stocks last week. Traders will now watch to see if they can continue to bounce or fail at potentially key resistance. The S&P 500 fell 1.2 percent in the holiday-shortened week between Friday, May 27, and Friday, June 3. The dip...
AMD Remained the Busiest Symbol in May With the Chipmaker Reporting Quarterly Results
Advanced Micro Devices was the busiest stock at TradeStation Securities in May as the chipmaker reported strong quarterly results. AMD held its position at the top of the rankings for the fourth straight month, according to TradeStation data. The company's earnings,...
Stocks Break Historic Losing Streak on Positive Earnings and Inflation News
Stocks exploded higher last week, breaking a historic losing streak, as good news chipped away at a wall of negativity. The S&P 500 rose 6.6 percent between Friday, May 20, and Friday, May 27 -- the biggest gain since November 2020. The rally broke a seven-week...
Technical Analysis: This LNG Tanker Stock Is Squeezing. Will a Breakout Follow?
Natural gas tanker stock Cheniere Energy has steadily trended higher for more than a year, but it’s effectively gone nowhere for three months. Now it may be getting ready to move again. The first pattern on today’s chart is the descending trendline that started...
‘Bear Market’ Is Trending as Inflation Pummels Corporate America
Investors are freaking out about the stock market as inflation pummels major retailers like Walmart and Target. The S&P 500 fell 3 percent last week. At one point on Friday it slipped below 3855, representing a 20 percent drop from the high of 4819 on January 4....
Historic Selloffs in Walmart and Target as Inflation Crushes Profit Margins
Retailers are having a bearish week as inflation hammers major chains like Walmart and Target. The pain began on Tuesday when WMT reported sales growth of 2.4 percent, but a 23 percent drop in operating income. TGT followed by announcing that revenue increased by 4...
Can Stocks Break Their Losing Streak as Attention Shifts Away From Inflation and the Fed?
Bearishness continues to run high in the stock market, but some traders may expect a bounce. At one moment last week, the S&P 500 was down 6.4 percent. That would have been the sharpest drop since March 2020, but it turned on Thursday afternoon and cut the loss to...
Stocks Cling to Support as Inflation Rages and Interest Rates Surge
Stocks are trying to hold a support level as investors worry about inflation and soaring interest rates. The S&P 500 slid 0.2 percent between Friday, April 29, and Friday May 6. The index swung wildly despite the small closing change. It initially plunged within a...
Global Fears Distract from Earnings as Advanced Micro and Meta Surge
Earnings season is normally a big time for the stock market, but these days investors have bigger fish to fry. Companies including Apple (AAPL), Microsoft (MSFT) and Tesla (TSLA) barely moved after issuing quarterly results. Each beat estimates on both the top and...
Options Recap: Are Airlines Ready to Fly?
Are airlines ready to take off? Some options traders seem to think so. The ARCA Airline Index ($XAL) rose 2.2 percent Monday, its biggest gain in over a month. The move on the heels of strong weekly bookings data and followed a broader rally in the transportation...
Greek of the Week: Gamma
This is the second installment of a four-part series about options Greeks that will appear on Market Insights between now and Labor Day week. Last week, we looked at delta. Delta measures how much an option changes in price when the underlying stock or ETF fluctuates....
Here’s How Much Money Someone Made in Apple on Friday
There's a reason why people trade options in Apple (AAPL). Check out this massive call spread that took shape in the tech giant during Friday's session. Roughly 81,400 August 215 calls were purchased in thousands of small blocks. Buyers paid $1.03 on average. A...
Riding a Megabank on the Cheap: Options Recap
One big investor is riding a megabank on the cheap, thanks to the leveraging power of options. Bank of America (BAC) has been on the move since late 2016. A large call roll yesterday seemed to show that a money manager is using options as a surrogate for owning...
Greek of the Week: Delta
This is the first installment of a four-part series about options Greeks that will appear on Market Insights between now and Labor Day week. Some clients may be confused by options, especially their use of Greek letters. Delta, gamma, theta, and vega. How to remember...
Options Recap: Traction for Major Automaker?
Is a well-known automaker ready to regain traction after skidding lower? One big investor seems to think so. A massive put sale was detected yesterday in Fiat Chrysler (FCAU), apparently reflecting a belief further downside will be limited. If the trader is right, he...
Know Your Options: Buying Volatility When It’s Cheap
Buy low, sell high. It's a basic rule of investing everyone's heard. What they might not appreciate, however, is how it applies to implied volatility. We'll examine that today because it may help spare some readers money and hassle. First, remember that implied...
How to Manage Risk in a Teetering Giant: Options Recap
Disclosure: This post is intended for educational purposes only. Options may not be suitable for all investors. What happens if you want to own a stock but are worried about short-term volatility? Use options -- that seemed to be the answer from a big investor...
Massive Leverage in Drug Maker: Options Recap
How much leverage can options produce? Keep reading to find out. On Friday, an investor crafted a three-part strategy in Mylan (MYL) that involved selling two contracts to buy another. The result was a position with the potential for massive percentage gains but also...
Small Caps Keep Running: Midweek Sector Check
Increased global risk keeps investors focused on domestic stocks in the Russell 2000.
Industrials May Be on the Mend
Economic news has been positive as the SPDR Industrial ETF (XLI) breaks resistance.
Don’s Notebook May 9, 2018
Don’s Notebook May 9, 2018 Producer prices open three straight days of inflation data. Today’s announcement, the Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS) is a family of indexes that measures the average change over time in the prices received...
A look behind yesterday’s wild session
This article is not a recommendation and is intended for educational purposes only. Yesterday was a roller coaster for the market, but it could suggest volatility will ease. S&P 500 futures (@ES) began the session down more than 30 points after China retaliated...
Don’s Notebook March 27, 2018
Case-Shiller data are likely to highlight the strength of home appreciation, which is a less publicized factor behind what have been robust levels of consumer confidence. The S&P Corelogic Case-Shiller home price index tracks monthly changes in the value of...
Don’s Notebook February 13, 2018
So far this morning, U.S. stocks are holding onto yesterday’s momentum, where the S&P 500 Index spent the entire session positive for the first time since its last all-time closing high on Jan. 26. Small business owners regained their high optimism in January...
Morning Notes Jan. 29, 2018
Personal Income and Outlays Report was issued this morning. This report breaks out December's consumer numbers, including inflation data, from last week's fourth-quarter GDP report. Personal income rose 0.4 percent in December with wages and salaries up 0.5 percent....
Suddenly Latin America is Red Hot
Move over China, here comes Brazil. Global stocks have outperformed domestics since last spring, mostly led by Chinese equities. But in the last week or so there's been a sudden gush into a region that many traders may have forgotten: Latin America. The region's...
Trust the Trend but Verify: Price Headly
Buy at support, sell at resistance, but always back-test. That was the message from our pro trader this morning. Price Headly, founder of BigTrends.com, runs Donchian channels on his TradeStation platform to time entries and exits. Like many other power users, he's...