Many that sell equity market put options focus on the S&P 500 (SPX, XSP, SPY). Some will add small caps by selling puts on the Russell 2000 (RUT, IWM). An investor could also make their put selling strategy globally diversified by adding MSCI EAFE (EFA) and Emerging Markets (EEM).
The “random walk hypothesis” (RWH) is one idea about how stock prices behave – but only one of many. It is a theory promoted in academia and believed in my many, but not so much by traders involved with handling real money. Theories aside, is the market truly random?
I’ve now been trading options for over a decade and been associated with Steady Options for seven years – hard to believe.Over that period, I’ve learned quite a bit about option trading; how to improve, what not to do, and generally how the option markets work. I’m still learning.
Options traders constantly seek the elusive reliable reversal signal. A few unusual but strong reversals are worth looking for, and their patterns reveal likely exceptional timing for opening or closing option trades. One example of this exceptionally strong signal is the island cluster (or, island reversal).
There currently are over sixty million Americans that are active 401(k) participants, and well over 500,000 total active 401(k) plans offered by employers in the United States.Despite these high numbers, usages could be higher, as the US Census Bureau estimates that only 41% of all employees with access to a 401(k) plan utilize it, with even less funding it fully.
I am on the hunt for a short volatility position for three main reasons. First, the market’s wild swings have, for the time being at least, diminished. Second, option activity has dried up as my options barometer continues to be stuck in the 4 – 6 range as traders are not making big bets in either direction.
For many US investors, the "base case" for equity investing is US large cap stocks, most commonly benchmarked as the S&P 500. You could absolutely do far worse than owning these 500 great US companies, and the weight of the evidence suggests that most actively managed mutual funds that benchmark themselves against the S&P 500 index have in fact done worse.
The use of moving average (MA) for predicting future price behavior must be undertaken cautiously. MA is a lagging indicator, so the question must be: Can a lagging indicator provide guidance for the future? Yes. The use of two MA lines and how they interact is a reliable form of reversal indicator.
This week Steady Options implemented the newest iteration of the Anchor trades – the Leveraged Anchor.This will now officially be tracked.We will also continue to track the Traditional Anchor as well. It is our belief that the Leveraged Anchor will perform better, on a risk adjusted basis than Anchor has, particularly on the upside of the trade.
Much of the discussion in finance is about "active" vs. "passive". Active management typically uses security selection and/or market timing to make portfolio management decisions. Passive management typically does not, instead, focusing on market risk premiums as the source of expected return. So which is better?
The covered call. That popular, strategy described by many as risk-free or at least so low-risk that you can’t go wrong. Or can you? A few dangers of the covered call should be described or, more accurately, a realistic point of view about this “sure thing” trade. A few points worth remembering:
Today might just have the smallest gap between Wall Street and Main Street we’ve ever experience.We’ve come a long way when it comes to common retail traders access, affordability of trade commissions, options trading education, research and analysis services, and, finally, some progress in accessibility of technology for options traders.
