Author: The INO.com Team

Stocks Set New Record Highs

Posted on by The INO.com Team

As expected, when there's a change of power, stocks have been all over the board this week, and after hitting record levels on Thursday, the major indexes are pulling back a touch heading into the weekend. The record highs now sit at 3,861.45 for the S&P 500, 31,27.22 for the DOW, and 13,560.22 for the NASDAQ.

But despite Friday's weakness, major averages are on pace to post a winning week. The S&P 500 is up +2.2% for the week so far. The DOW is up +0.6%, and the NASDAQ is up +3.8%.

Bitcoin took one on the chin this week, losing over -10% as we head into the weekend. The reason for the sudden selloff? Janet Yellen's comments about Bitcoin this week. She suggested on Tuesday that lawmakers "curtail" the use of cryptocurrencies such as bitcoin over concerns that they are "mainly" used for illegal activities. Continue reading "Stocks Set New Record Highs" →

Iron Condors - 50% Max Loss Reduction

Posted on by The INO.com Team

Harnessing options allows one to define risk, leverage a minimal amount of capital, and maximize return on investment. Options enable smooth and consistent portfolio appreciation without predicting how the market will move. Options enables one to generate consistent monthly income in a high probability manner in both bear and bull market scenarios. This can be accomplished since options can be structured to allow a margin of downside and upside stock movement while collecting income in the process.

An agile options-based portfolio is essential to navigate pockets of volatility and mitigate market downdrafts. The recent September correction, October nosedive, and election volatility into November are prime examples of why risk management is paramount. Over the past ~9 months (May-January), 190 trades were placed and closed. An options win rate of 97% was achieved with an average ROI per winning trade of 7.7% and an overall option premium capture of 82% while matching returns of the broader market and outperforming during market downswings. An options-based portfolio's performance demonstrates the durability and resiliency of options trading to drive portfolio results with substantially less risk. The risk mitigation element is crucial, considering markets are richly valued as measured by any historical metric and technically breaking through its upper Bollinger band (Figures 1 - 6). An iron condor options strategy is a great way to reduce overall capital at risk when deploying options to drive portfolio results.

Options-Based Results

Iron Condors

Figure 1 – Overall option metrics from May 2020 – January 10th, 2021
Continue reading "Iron Condors - 50% Max Loss Reduction" →

First Losing Week Of 2021

Posted on by The INO.com Team

The bull run that started in December had to take a breather after it extended into 2021 and this week was the week. Six of the seven markets that we track weekly will finish the week down, and the one market that is up may shock you.

We'll start with the three major indexes. The S&P 500, DOW, and NASDAQ will post their first weekly loss of the year and the first in four weeks, with losses standing at -1%, -.6%, and -1%, respectively.

The week's surprising winner is the US Dollar with a weekly gain of +.6%, marking its second straight week of gains, which was enough to trigger a new green weekly Trade Triangle, moving the US Dollar to a sidelines position. Continue reading "First Losing Week Of 2021" →

Another Day Another Record High For Bitcoin

Posted on by The INO.com Team

Bitcoin (BITSTAMPUSD) hit a new record high of $42,000 Friday afternoon, surpassing the previous all-time high of $40,123 that it reached on Thursday. Year-to-date gains are now over 40% making Bitcoin the strongest mover in 2021 by far. In typical bull market euphoria, Bitcoin's price has more than doubled in less than a month as new investors rush in, making sure they don't miss out. You know, FOMO, "fear of missing out," but is it too late?

Mutual fund titan Bill Miller told CNBC that "One of the things that's interesting about bitcoin is that it gets less risky the higher it goes, that's the opposite of what happens with most stocks."

He went on to say, "For those people who are waiting for the pullback, they got it in the first quarter. You could have bought bitcoin and $4,000 in the first quarter," Miller noted, referencing bitcoin's nearly 50% intraday crash in March 2020.

"But amid bitcoin's more than 300% rally in 2020 extended by an additional 40% gain already in 2021, Miller said, the price of these returns is the asset's volatility." Continue reading "Another Day Another Record High For Bitcoin" →

Leveraging Options To Navigate Frothy Markets

Posted on by The INO.com Team

Wall Street capped off one of the most volatile years in history. The Dow Jones and S&P 500 ended the year at all-time highs, posting returns of 16.3% and 7.3%, respectively, for 2020. At the same time, the Nasdaq posted a return of 43.6% for the year. These unprecedented returns were achieved despite the S&P 500 nosediving over 30% earlier in the year due to the coronavirus pandemic sweeping the world. In this market environment harnessing options can allow traders to define risk, leverage a minimal amount of capital, and maximize returns.

All-time highs have been reached with the confluence of election certainty, improving vaccine prospects across the globe, and massive stimulus out of Washington. These positive developments have been priced into the markets. The broader indices are richly valued as measured by virtually any historical metric via stretched valuations, options put/call ratios, broad participation above 200-day moving averages, and elevated P/E ratios. Collectively, these may be potential warning signs of near-term pressures. Heeding these frothy market conditions via risk mitigation may be best served with risk-defined options trading.

Options: Margin of Protection and Defining Risk

Harnessing options in frothy markets allows one to define risk, leverage a minimal amount of capital, and maximize returns. Options can be structured to allow a margin of downside and/or upside stock movement while collecting income in the process. In these richly valued markets, allowing a margin of downside and/or upside stock movement may be a great strategy to heed potential market volatility. Continue reading "Leveraging Options To Navigate Frothy Markets" →