Category: INO.com Contributors

Options - How To Capture Over 100% Premium

Posted on by The INO.com Team

How is it possible to capture more premium than what you sold an option contract for? The answer lies in the manner in how you construct your option trade (i.e., put spread vs. custom put spread). A custom put spread leverages a minimal amount of capital, defines risk, and maximizes the return on investment while enabling traders to capture greater than 100% of the option premium. Custom put spreads are ideal when engaging in options trading for many reasons. This type of trade is great to layer into a long-term successful overall options strategy which includes risk-defining trades, staggering expiration dates, trading across a wide array of uncorrelated tickers, maximizing the number of trades, appropriate position allocation, and always being an option seller to bring premium income into the portfolio continuously.

Using a combination of custom put spreads and put spreads, a total of 91 trades were placed in May, June, July, and thus far in August as the markets rebounded after the COVID-19 lows. During this timeframe, all 91 trades were winning trades to lock-in a 100% option win rate with an average income per trade of $185, an average return on investment (ROI) per trade of 7.5%, and overall premium capture of 99.4%. An options-based portfolio can offer the optimal balance between risk and reward while providing a margin of downside protection with high probability win rates. As the market continues to rebound, optimal risk management is essential when engaging in options trading as a means to drive portfolio performance (Figures 1, 2, and 3).

Options
Figure 1 – Average income per trade of $185, the average return per trade of 7.5% and 99.4% premium capture over 91 trades in May and June
Continue reading "Options - How To Capture Over 100% Premium" →

Precious Metals: Where Do They Go From Here?

Posted on by Aibek Burabayev

When I see such situations in the market as we witnessed in precious metals lately, I think about two trading mantras. The first one says, “any profit is a profit,” aka “lose chances, not money,” and the second is “corrections are tricky.”

Both metals’ charts started to play out precisely as per the structure that was shown in my previous update, and I am very grateful as you supported my view with an overwhelming majority of voters. Indeed, it paid well, although the depth of the first leg down was just devastating as it exceeded the preset range.

Usually, the first legs are so strong and sudden as they trigger panic in the market. Although I expected this move weeks ahead, when it plays out, you’re never emotionally ready for such a storm as it literally could have no boundaries. The fear had it all. Some traders think they could sit through such enormous volatility. I doubt that risk management/capital/margin could allow it as gold lost more than 10% from the top to the bottom of the first leg while silver has been smashed, losing 22%.

The dust is quietly settling down after that fall, and we can adjust the plan. Let’s start with gold’s daily chart.

Precious Metals
Chart courtesy of tradingview.com

Again and again, we witness the real power of the trends as the “falling knife” of the first leg down was successfully rejected with the downside of the trend channel (gray). The price bounced off so hard that it retraced more than 60 percent of the preceding drop. Then it lost more than 60 percent again, but of the rise. If it continues to make such seesaw moves within a contracting range, then we will see a Triangle pattern shaping on the chart. I highlighted that option with a green color. I put two converging trendlines with almost ideal angles of a triangle, but the real path could differ, although the model should remain intact. The break above the last peak will trigger the upside move. Continue reading "Precious Metals: Where Do They Go From Here?" →

Record Close For S&P 500 To End Week

Posted on by The INO.com Team

Stocks closed higher on the day Friday to end what was a record week for stocks, specifically for the S&P 500 and NASDAQ. The S&P 500 gained +.34% to 3,397.16, a new record closing high. The NASDAQ climbed +.4% and ended the day at 11,311.80, also a record close. The DOW finished trading up 190.6 points at 27,930.33, a gain of about +.7%.

On a weekly level, the S&P 500 gained +.72%, the NASDAQ outperformed gaining +2.6% on the week, and the DOW was left in the dust finishing flat on the week. Continue reading "Record Close For S&P 500 To End Week" →

Fed Rules Out Yield Curve Control (For Now)

Posted on by Gary Tanashian

That we are even having this conversation is proof that we are and have been in…

alice in wonderland

…Wonderland for years now.

Since at least 2001, actually. Back then Alan the Wizard Greenspan (mixing classic fairy stories, I know) began pulling levers that could never be un-pulled. There were no breadcrumbs with which to find our way back. Off the charts is off the charts. Exponential is exponential. And that’s when funny munny out of thin air entered the realm of normalcy; new normalcy where the financial system is concerned.

I assume that the ‘tool’ known as yield curve control (per this article) is part of MMT (Modern Monetary Theory) TMM (Total Market Manipulation) that the eggheads promote with not an ounce of historical monetary grounding, caution or even human-like soul. They are monetary Humanoids, AKA bureaucrats, AKA economic Ph.Ds with more statistical and theoretical knowledge than common sense. They released the FOMC minutes and policy micro-managers offer their interpretations. Continue reading "Fed Rules Out Yield Curve Control (For Now)" →

Disney Streaming Negating COVID-19 Impact

Posted on by Noah Kiedrowski

Disney’s impressive streaming numbers have thus far negated the impact that COVID-19 has had on its other business segments, mainly its parks. The Walt Disney Company (DIS) has had to shutter all of its worldwide Parks and Resorts, and ESPN has been hit with the cancellation of virtually all sports worldwide. Advertising revenue coming through its media properties has been hit as companies scale back ad spending. All of its movie studio productions have been halted, and movie releases are postponed. Despite the COVID-19 headwinds, streaming initiatives have been major growth catalysts for the company. Disney+’ growth in its subscriber base has shifted the conversation from COVID-19 to a durable and sustainable recurring revenue streaming model. This temporary bright spot, in conjunction with the optimism of its Park and Resorts coming back online, has been a perfect combination as of late. Disney+ has racked up 57.75 million paid subscribers, Hulu has 35.5 million paid subscribers, and ESPN+ has 8.5 million paid subscribers. Disney now has over 100 million paid streaming subscribers across its platforms. Disney+ has been wildly successful via unleashing all of its content (Marvel, Star Wars, Disney, and Pixar) in what has become a formidable competitor in the ever-expanding streaming wars domestically and internationally. Hence the tug-of-war on Wall Street between COVID-19 impacts versus the success of its streaming initiatives. Thus far, its streaming success has changed the narrative as its stock is approaching highs not seen since February. Disney is a compelling hold as its legacy business segments get back on track in conjunction with these successful streaming initiatives.

Long Game

Disney’s business segments will regain their health as COVID-19 subsides worldwide and/or there’s a vaccine approved. Parks will reopen as seen with Shanghai, Hong Kong, and Disney World. Inevitably, movie productions will resume, movie theaters and resorts will reopen, and sports will play-on. The resumption of all of these activities will feed into Disney’s legacy businesses in conjunction with its streaming successes. Disney continues to dominate the box office year after year with a long pipeline of blockbusters in the queue. Its Parks and Resorts continue to be a growth avenue with tremendous pricing power outside of COVID-19. Disney is going all-in on the streaming front and acquired full ownership of Hulu, and the company has launched its Disney branded streaming service with tremendous success with kudos from Reed Hastings. I feel that the company offers a compelling long-term investment opportunity given its growth catalysts that will continue to bear fruit over the coming years despite the current headwinds. Continue reading "Disney Streaming Negating COVID-19 Impact" →