Short Side of the Moon

Feeling bearish? Options and futures can beat short-selling. Here’s how. There’s something suave about shorting the market, whether it’s fading an earnings pop, selling a pandemic rally or jumping into a long squeeze. It’s risky, contrarian and sometimes highly profitable. As the adage goes, markets take the stairs up and the elevator down. While short-selling … Continued

Tips for Trading Microchips

Semiconductor stocks offer high volatility and extraordinary liquidity Tech stocks were the market to buy in 2020. While Covid-19 crippled many sectors, technology stocks bloomed with a 40% rally from the start of 2020 to the beginning of this year. (See Active market, big potential, below). But “technology” has become a catch-all term, so let’s … Continued

Delta Values

Traders can take advantage of the key to estimating that an option will expire in-the-money New traders often think they’re drowning in information when they open their first options chain. Dealing with puts and calls, dozens of strike prices and numerous expiration dates can feel like shopping for a jar of spaghetti sauce in a … Continued

Exploiting Election Week Volatility

Stock options can triple in volatility as election day approaches, creating opportunities for traders to sell when prices skyrocket Expectation of movement in the markets helps determine the price of the options that traders rely on for “insurance.” The greater the risk of loss, the greater the cost of the insurance.  Expectations are measured with … Continued

Start Here: Calculating Volatility

With some (relatively) simple math, traders can track price moves in stocks and indexes When a stock or index is down on the day, financial media and self-proclaimed market gurus describe it as “volatile,” even though that down move just brought the stock back to where it started before it rose. “Experts” improperly use the … Continued

ETF Interest Rate Strategies

Exchange-traded funds provide a good way of trading economically sensitive interest rates Few products are as costly and complex as interest rate futures. For retail traders looking for interest rate exposure, Treasury ETFs are a much better place to start. But before buying a bond ETF, take the time to understand a few basics about … Continued

Leg Up on Futures Calendar Spreading

Learn the idiosyncrasies of intramarket spreads—trades where an investor simultaneously buys and sells the same futures contract in different expiration months Professional traders seeking commodity exposure often make futures their preferred investment vehicle because of their capital efficiency, exactness in tracking an underlying spot market and deep liquidity. But unlocking the benefits of futures can … Continued

Calling on Commodities

Just when investors need diversification in the most volatile markets ever, traditional equity products are failing as hedges and diversification tools  With the coronavirus sweeping the globe, equity markets are careening from highs to lows and back again with more volatility than ever before. During the last three years the average daily move in the … Continued

Pairs Trading with Futures

For a pairs trade, find two highly correlated assets that have recently diverged in performance Pairs trading involves buying and selling related markets to capitalize on performance disparities. Traders can use the strategy to reduce outright risk, diversify a portfolio and find new trading opportunities when markets seem recalcitrant. To structure a pairs trade, look … Continued

ETFs Move Over: Smaller Futures are Here

That’s the greatest financial innovation of the last 20 years? Weekly options? Digital currencies? Zero commissions? It may come as a shock that many consider exchange-traded funds (ETFs) the biggest and most important change. After trading ETFs for so long, it’s easy to forget how capital markets used to look—illiquid and expensive. But it’s important … Continued