By Lawrence G. McMillan
Once again, it appears the October has become the “bear killer.” Yes, volatility is still high and put volume is still heavy, so there are clearly worries out there. But it’s normal for there to be plenty of worries at the beginning of a new bullish phase. In this article, we’re going to look at some other similar October bottoms in the past to see how the market unfolded at those times.
By Lawrence G. McMillan
One often feels that the current market conditions are more difficult than he’s seen before, even though they’re usually not. It’s just that the past travails have been pushed further into one’s subconscious, perhaps merely because they’ve been survived. It’s like Army veterans fondly recalling basic training, when – in reality – it was a real pain when it was taking place; but a few years later, it doesn’t seem so bad.
By Lawrence G. McMillan
One of the reasons that we favor $VIX derivatives as a portfolio, hedge rather than $SPX (or SPY) puts, is that $VIX is much more volatile. Also, $VIX protection is more dynamic. However, there can be some problems with the timing of a market’s breakdown and the convergence of $VIX derivatives with $VIX. In this article, we’re going to look at the details behind these actions, so that those who buy $VIX derivatives for speculation or protection might better understand what the potential problems are.
By Lawrence G. McMillan
Vertical skews appear in option prices during times of panic and in futures prices in terms of euphoria. Since we have been experiencing a lot of both lately, we have gotten some requests from traders asking how to play these skewed situations without using naked options. This is a subject that we have covered in the past, but it might be a good time to review it, considering current market conditions.
By Lawrence G. McMillan
There has been something of a “buzz” in volatility forums and in some media articles about a backspread strategy that is designed to take the loss out of using $VIX options for protection or speculation. As you know, we are running a “perpetual call buy” strategy for long $VIX calls (Position S610). Also, this week we recommended the purchase of $VIX calls as protection for stock portfolios, for those who were worried about what might happen in the event of a downgrade of U.S. debt or a failure to raise the debt ceiling.
Weekly put option sales have been added to the analyses in The Strategy Zone (SZ) and in the Option Work Bench (OWB).
Subscribers to The Daily Strategist that follow our weekly SPY sales, are up +18% in five months, in the ongoing position that we are running in that newsletter.
By Lawrence G. McMillan
We normally follow the equity-only put-call ratio as one of our main contrarian indicators. However, there is another put-call ratio that we follow from time to time, as it gives occasional signals. That is the total put-call ratio, and it is on the verge of giving a buy signal. We last wrote about this almost exactly a year ago (Volume 19, number 10&11 [double issue]). In this article, we’ll review the indicator and update the results over the past year.
By Lawrence G. McMillan
This is the second of two articles on weekly calendar spreads. In the last issue, we dealt with some of the complexities of this strategy, and promised to finish the study so that we could begin using some of the strategies in this newsletter – if they proved viable in our studies. Even though we weeded out some of the possibilities with the research presented in Part 1 of this subject (published in Volume 20, No. 9), there were still plenty of possibilities remaining.
By Lawrence G. McMillan
Ever since we ran an article last fall on selling weekly options, subscribers have been clamoring for (okay, well maybe not “clamoring,” but several have requested) an article on weekly calendar spreads. Of course, in that previous article, we promised a future article on weekly calendar spreads. So the time has arrived to try to tackle what is a far more complex subject than merely selling weekly puts. The calendar spread subject is complex because there are myriads of ways it can be approached – put calendars or call calendars?
