It looks like things are going to be very interesting in the new year. The market is strong, as evidenced by new all-time highs in all of the major indices this past week $SPX, $NDX, $DJX, and $RUT (although $RUT has faltered a bit in the last couple of days). Since price action is the most important indicator, the overall trend remains bullish as long as $SPX holds above support.
This article was originally published in The Option Strategist Newsletter Volume 21, No. 22 on November 30, 2012.
We often trade the first day of the month, since we have done a considerable amount of research on the subject.
The table below shows the gains from trading $SPX on only the first day of the month. That is, it is theoretically bought at the close on trading on the last trading day of the previous month, and it is sold at the close of the first trading day of the new month.
This article was originally published in The Option Strategist Newsletter Volume 11, No. 23 on December 12, 2002.
As we head into the end of the year, it is time to turn our attention to matters such as the January Effect and other year-end tendencies. In recent years, the January Effect has changed its nature somewhat, but can still be a profitable item to trade. In addition, volatility patterns near year-end have a traditional look to them. We’ll take a look at both in this article, plus a couple of other oft-quoted “January barometers” to see if they really hold water or not.
The bears took advantage of a small window before the "Santa Claus rally" begins to drive $SPX down a bit. Once again, support in the 3630 3650 area has held. We are still viewing 3550 as the more important support area, for if that were broken, then the $SPX chart would take on a bearish aura.
Equity-only put-call ratios continue to decline, and thus they remain on buy signals. They are extremely overbought, but that is not a sell signal.
This article was originally published in The Option Strategist Newsletter Volume 1, No. 4 on February 13, 1992.
LEAPS is an acronym for Long-term Equity AnticiPation Securities. This is a wordy name for "long-term option". A LEAPS (or is it a LEAP?) is nothing more than a listed call or put option that is issued with two or more years of time remaining. It is therefore a longer-term option than one is used to dealing with. Other than that, there is no material difference between LEAPS and other calls and puts. Strategies involving long-term options are not substantially different from those involving shorter-term options. However, the fact that the option has so much time remaining seems to favor the buyer and be a detriment to the seller. This is one reason why LEAPS have been popular.