This article was originally published in The Option Strategist Newsletter Volume 20, No. 3 on February 10, 2011.
Most traders are familiar with the concept of averaging down. It is almost a mantra as far as long-term investment strategies go; buyand- hold funds and investors often feel they are getting a bargain when they get a chance to average down. However, the strategy can be a disaster in certain circumstances.
Join Larry McMillan as he discusses the current state of the stock market on January 17, 2023.
The stock market has put on a good show of strength this week, after breaking out on the upside from the trading range that had held prices in check throughout the last half of December. $SPX is now challenging the downtrend line of this bear market as well as its declining 200-day Moving Average, both of which are near 4000. A clear breakout above 4100 would be very bullish.
50 years ago, on April 23rd, 1973, the CBOE opened its doors and listed option trading began. For the first time, such things as standardized striking prices and expiration dates were available on an option contract.
The CBOE’s first President, Joe Sullivan, had done a tremendous amount of legwork, regulatory work, and arm-twisting (I’m sure) to get the exchange off the ground.
An item that has been affected by higher interest rates is the premium on S&P (and other) Index futures. The premium on a stock index futures contract is related to dividends (higher dividend payouts decrease the premium on the futures) and interest rates (higher interest rates increase the premium on the futures). We received this question recently, and I realized once again that newer traders may not have seen this before:
It turns out that the increase in interest rates has gone on long enough and raised rates enough that some things regarding derivatives are occurring that haven’t been in place in quite some time – or ever, for that matter. We are going to address a couple of related topics. Newer option traders might not have seen some of these things before, since essentially interest rates have been at or near zero since 2009, until last year.
Join Larry McMillan as he discusses the current state of the stock market on January 9, 2023.
We are well into the new year of trading, and the seasonally bullish period surrounding year-end has passed. The Santa Claus Rally produced a small gain for $SPX of 30 points less than its historical average of a 1.1% gain, but a gain nevertheless. If it had been a loss, that would have been another negative for the stock market.
This article was originally published in The Option Strategist Newsletter Volume 14, No. 22 on November 23, 2005.
As we enter the holiday season, the media will mix and match terms referring to the various Holiday-related trends of the stock market. They rarely get it straight, and as a result, they wind up confusing a lot of people. Here are the major ones:
Happy New Year! Join Larry McMillan as he discusses the current state of the stock market onJanuary 3, 2023.