More Bang for Your Buck

As a trading vehicle, nothing beats futures in terms of cost efficiency, liquidity and, for some, tax treatment. Take a look below.   First, note the “Futures USD Notional,” which is the true (unmargined) size of each product. The profit/loss of a 10% move in the /ES futures would be a $176,800 x 10% = … Continued

Make History Work For You

Google provides historical stock prices traders can study or use to create a personalized portfolio tracker  Anyone with a Google account can easily download historical stock prices for free.   First, head to Google’s version of a spreadsheet, Google Sheets, and start a new document: docs.google.com/spreadsheets. In Cell A1, type the following and then hit … Continued

Three Election-Day Hedges

Check out the pros and cons of three ways to protect a portfolio amid the uncertainties of a race for the presidency  Buy a put This is the least favorite approach to “portfolio insurance,” but it does provide a high degree of protection.   Say, for example, that Advanced Micro Devices (AMD) is trading for … Continued

All Your Options

Have a directional assumption about a stock? With options, traders have a much larger range of possibilities than with stocks. Instead of being just “bullish” or “bearish,” options provide ways to create trades with high and low probabilities of making money. Some of the strategies listed on this page have pre-determined levels of risk and … Continued

The Limits of Standard Deviation

Why use standard deviation to look at past stock prices when options provide a window into what’s to come? One of the easiest ways to quantify risk is by observing standard deviation, which is a fancy way of quantifying how much a stock has moved. To calculate a stock’s standard deviation, take all the prices … Continued

Futures: Ticked Off

Differing tick sizes and varying dollars per tick can make futures trading confusing. This handy crib sheet can help. Keep an eye on the “Median Day-to-Day Movement” column, and don’t trade too big for the account. Don’t fret about the cacophony of contract sizes, notional values and futures-trading ticks. Save this!  Sign up for free … Continued

The REIT Trade

Real estate investment trusts tend to pay dividends that can ease the pain of a bad trade Got a bad trade? Tell everyone you bought the stock for the dividend. It’s an old joke among traders and provides cover for a mistake. But in all seriousness, dividends do add a nice buffer to lackluster stock … Continued

Digging Gold

When the markets are in turmoil, money tends to flow out of stocks and into “safer” investments. The market’s definition of “safe” changes, but when stocks declined in March, money went into bonds and gold. The results? Let’s look at how diversification played out during the height of the turmoil.  Gold has a history of … Continued

When Airlines Stocks Resume Flight

Because of coronavirus fears, the only seats filled these days are the ones in front of TVs. With very few people traveling, airline stock prices have declined an average of 50% during the past few months, prompting long-term investing maven Warren Buffet to make the unusual announcement that he was exiting his positions in the … Continued

Here Are Some ETFs to Avoid

Many commodity ETFs represent bad long-term investments Investors often want part of the action when commodities start to move around, especially when prices decline. It’s logical then that they often head to exchange-traded funds (ETFs). What’s not to love? They’re easy trading vehicles that don’t require special trading permissions, and the prices are affordable for … Continued