Well, the market finally found something it couldn't shake off -- at least not right away -- on the geopolitical front. Normally, this wouldn't be a big deal, but an overbought, somewhat nervous market can react to this type of news dramatically, and it did. So what is the real overall effect?
By Lawrence G. McMillan
(Barron's) - This bull market is rather unpopular—and that's good.
Since the rally began in early June, most investors and traders have doubted the advance because they were so afraid of Europe's debt crisis, U.S. economic problems, and even the U.S. presidential election.
By Lawrence G. McMillan
Traders of volatility derivatives -- futures, options, or exchange-traded funds and notes -- often wonder why the VIX, or the Chicago Board Options Exchange Market Volatility Index, moves much more violently than do the derivative contracts that are based on it.
By Lawrence G. McMillan
Put-call ratios are excellent measures of the sentiment of the general option-trading community. When the sentiment is that "too many" people are buying puts or calls, it is worthwhile to pay attention, for the majority are normally wrong at major turning points, and their actions can be interpreted into a market trading signal.
The rumor mill is running overtime lately, with takeover talk on the upswing in the markets. Most rumors don't lead to signed and sealed deals, and actual transactions aren't much discussed in advance. But mere talk about deals can lead to heavy and potentially profitable option activity, especially as one can attain a large amount of leverage if there is a big jump in a stock's price.
