Early last month I reviewed some of the fundamental arguments for Barclays (BCS) and looked at the volatility environment in the stock to suggest a trade idea ("
Thursday, December 18, 2008
Mr. Potter: [to George Bailey] Look at you. You used to be so cocky. You were going to go out and conquer the world. You once called me “a warped, frustrated, old man!” What are you but a warped, frustrated young man? A miserable little clerk crawling in here on your hands and knees and begging for help. No securities, no stocks, no bonds. Nothin’ but a miserable little $500 equity in a life insurance policy.…
Thursday, November 6, 2008
So, option activity in Procter & Gamble (PG) has been extremely high for days now, first ahead of earnings, and now in advance of their merger with Folgers. The stock is 16% off its recent lows, and has been unusually volatile over the past two months along with the rest of the universe. The interesting thing here, though, is that with all this unusually high option activity, you might expect implied volatility to be hitting new highs as well. …
Tuesday, August 12, 2008
Here are some data that have us thinking this afternoon: maybe the Nasdaq doesn’t resume its parabolic move from here. There are certainly plenty of short term reasons for Nasdaq bulls to frown and doze off for awhile: the QQQQs are up over 7% in 7 days. Money flow has been stagnant. The ADX line is only barely ticking up, and RSI readings at various periods are all inching toward overbought. The McClellan Oscillator (attached) may have peaked, and even…
Monday, July 28, 2008
Ryanair (RYAAY) is down about 25% today after it warned that it would miss expectations for Q1 and would probably post a loss for 2008. The reason? They deliberately refused to hedge their exposure to oil prices… Ryanair said last year that it would not hedge against the rising cost of oil last year, unless fuel prices fell below $100 a barrel. …oh, until now, that is: However on Monday, O’Leary said the airline was now hedged 90.0%…
Thursday, July 24, 2008
The inverse relationship between oil prices and equity markets still seems intact: as crude has sold off over the past week, markets have lifted, and some analysts have even tried charting an hour-by-hour mapping of the correlation. While we’re long-term bullish on oil (how could anyone not be?), we don’t anticipate an immediate or intense turn around in crude prices. At the same time, while the price of oil could certainly drift a bit lower, we don’t foresee any catalysts…
Tuesday, July 22, 2008
In another month of fast-moving, trending price action—one of the two worst scenarios for the Calendar Options strategy (the other being a plunge in implied volatility)—we were able to come away with only a small average loss. We played it cautiously from the beginning, expecting the resumption of the bear market to keep price volatility high throughout the cycle. Consequently, we entered just two trades for July. We had to make one adjustment by the time July rolled around, but…
Sunday, July 13, 2008
The Striking Price column in this weekend’s Barron’s features John Marshall from Goldman, who suggests an “opportunity to buy volatility” in the S&P Materials sector via the tracking ETF (XLB). He makes the bearish case for XLB, arguing: 1) that the materials sector is particularly vulnerable to any slowdown in global growth, 2) that the ETF components include some less resilient names, and don’t feature the best of breed like POT and MOS, and 3) that hedge funds are…
Friday, July 11, 2008
We were hoping again this month that we’d be able to roll out the short options in our EEM calendar spread instead of closing the position entirely. But between the sour mood on Wall Street, a lot of economic data coming out next week, and second-quarter earnings announcements picking up, trading is likely to be even more volatile than in a “normal” expiration week. Bearing in mind that good risk management is essential, we’re closing our entire position, as follows:…
Thursday, July 10, 2008
We’re taking advantage of the fact that IYR’s share price is exactly at the sweet spot for our adjusted calendar spread and closing the position. We want to scale back our risk prior to expiration week (our EEM position is still open), and at the price below, we’ll have a 6% profit–not too bad for less than two weeks in a volatile market. Here’s the order we’re placing this afternoon: Day limit order Sell to close 2 IYR August…
Wednesday, July 9, 2008
Yesterday we were blindsided by an explosive end-of-day rally in IYR. The gain for the day was a whopping $4.21–that’s more than 3½ times IYR’s one-day standard deviation (which means the statistical probability of such a huge one-day move is less than 0.02%). Short-covering probably was a big factor in the size and speed of the rally…but regardless of the whys and wherefores, the market erased a week and a half’s losses in a matter of hours. IYR has lost…
Jared Woodard is a registered commodity trading advisor who specializes in trading volatility as an asset class. With over a decade of experience trading options, futures ... Read More
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Tuesday, January 22, 2013
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