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Portfolio Protection, Revisited (20:21)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 20, No. 21 on November 17, 2011. 

We have written about the subject of protecting a portfolio of stocks with derivatives several times over the years, although it’s been a while (Volume 19, Numbers 6 and 12 had articles on the subject). Recently, some subscribers have inquired about how to calculate the amount of protection they need.

Big SPX Moves

By Lawrence G. McMillan

Last fall, we published several studies in The Option Strategist Newsletter and summarized them here, as well as enacted several trades based on “big moves.” At the time, 20 of the 21 largest $SPX daily rallies had been reversed in a fairly short period of time afterwards (3 to 23 trading days). The only one that had not been reversed was the one coming out of the March 2009 bottom of the financial crisis. Then there were two – on December 26th, 2018, and January 4th, 2019 – that weren’t reversed either. The reason that these are usually reversed is that occur during volatile, bearish markets where rallies are fierce but short-lived. However, at the actual bottom (March 2009, December 2018) the rallies were real – not just oversold bounces.

How Implied Volatility Affects A Popular Strategy (09:03)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 9, No. 3 on February 10, 2000. 

We have often spoken about how to calculate or interpret implied volatility, and how to relate it to historic volatility. Some of these discussions have bordered on the theoretical, while others have been quite practical. However, we haven’t really addressed how implied volatility affects a specific option strategy.

McMillan Inteview Best Moment in May

By Lawrence G. McMillan

McMillan Analysis Corp. president Larry McMillan's recent interview with Anthony Crudele was highlighted in his Best of May podcast. Click here to listen. 

Weekly Stock Market Commentary 5/31/2019

By Lawrence G. McMillan

Stocks broke down through 2800 this week, and that had been a major support area. The $SPX chart is negative in that it is trending lower, now with lower highs and lower lows. There is only minor support below here, essentially at 2660-2680.

Weekly Stock Market Commentary 5/24/2019

By Lawrence G. McMillan

The main thing to keep in mind is that $SPX has not broken down below support at 2800. It was tested -- more or less -- once again yesterday and has held so far. A close below 2800 would be very negative from the viewpoint of the $SPX chart.

Overheard, the major resistance on the $SPX chart is the double top at the all-time highs. More than one bear market has started from a similar pattern.

McMillan Interview on Futures Radio

By Lawrence G. McMillan

Larry McMillan was recently interviewed by host Anthony Crudele for the Futures Radio Show. Larry discussed how he learned to trade options, technical analysis techniques, an S&P straddle trade, reasons to trade mult-leg positions and much more in this 40 minute interview. 

The Option Strategist Newsletter Results of Recommendations for 2018

By Lawrence G. McMillan

The following table is a summary of the results, by strategy, showing the number of positions recommended in that category; the number of wins and losses, the win percentage rate, the total profit or loss in that category, and the average return at annual rate (the average return, annualized using the average holding period). 

Weekly Stock Market Commentary 5/17/2019

By Lawrence G. McMillan

$SPX bounced off of strong support at 2800 on Tuesday, and then fell back from resistance at 2890-2900 on Thursday, so for now $SPX is in trading range between 2800 and 2900 (roughly). I don't expect that range to last long, and a breakout either way is probably going to gather momentum quickly.

Weekly Stock Market Commentary 5/10/2019

By Lawrence G. McMillan

Supposedly because of the China trade talks, but probably as much because the market was overbought and tired. $SPX headed lower this week. Several support levels have since been violated, but not all of them. This could still turn out to be a minor correction if support at 2800 can hold. However, caution is certainly warranted at this time, as the burden of proof is now on the bulls. The most negative aspect is that there is a double top in place now.


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