Blogs

The Option Strategist Newsletter Volume 23, No. 01 Preview

By Lawrence G. McMillan

Recently, the “Skew Index” published by the CBOE shot upward, creating discussions around the option trading community as to its meaning. In the feature article, we take an in-depth look at whether a high $SKEW reading should call for caution in the stock market.

Is The Skew Index ($SKEW) A Market Predictor?

By Lawrence G. McMillan

We always publish a table of the skew in $OEX options (page 9 in this issue), as a sample of how the major index options are skewed.  We also talk about skew in relation to individual stocks and for particular strategies (horizontal skews for calendar spreads, or vertical skews for ratio spreads, for example).  

Weekly Stock Market Commentary 1/10/14

By Lawrence G. McMillan

Stocks have been fairly dull so far in 2014, but some movement is probably setting up soon. Not much has changed with respect to the indicators that we follow, but let's review them anyway.

The Standard & Poors 500 index ($SPX) has pulled back modestly. As long as the support at 1810 remains intact, the trend is bullish for $SPX.

Equity-only put-call ratios continue to remain near the lower regions of their charts (Figures 2 and 3). This means they are in an overbought state.

MF Global Contest Winner Announced

By Lawrence G. McMillan

Two days ago, I received notification from the United States District Court, Southern District of New York, regarding the matter of MF Global Holdings Ltd. Investment Litigation.  The notice says that the Class (former commodity futures customers of MF Global) has settled for 100% of the net equity claims in the lawsuit.  In other words, eventually people got their money back, but it took over two years.

Stan’s Option Challenge: Question #2

We all know that trading options is exciting, highly competitive, and can be very profitable. The key to long term and consistent profits in option trading is options education.

Weekly Stock Market Commentary 1/3/14

By Lawrence G. McMillan

The new year started with a thud, as selling pressure that had been building up over the past few days was released.   Even after the selling, the $SPX chart is bullish, as long as it remains above 1810.

Equity-only put-call ratios have rolled over to sell signals, from very low (overbought) levels on their charts.

Market breadth had been quite strong -- until January 2nd.  Breadth was so negative today that the breadth indicators are just barely clinging to buy signals at this time.

The Option Strategist Newsletter Volume 22, No. 24 Preview

By Lawrence G. McMillan

The feature article is our annual market review and forecast issue.  Forecasting has taken a back seat to Fed watching these days, but we present some data on how markets in general have fared after two strong years, such as the two that have just concluded.

Lawrence G. McMillan's 2013 Stock Market Review & 2014 Forecast

By Lawrence G. McMillan

As we always warn subscribers, a forecast for the following year is more of an exercise in theory than practice.  That’s because our indicators are short-term in nature, and we will always strive to be in synch with them.  Having said that, the word “forecast” – as it pertains to the stock market – has never seemed as frail to me as it does now.  That’s because the Fed’s action has taken center stage.

Weekly Stock Market Commentary 12/27/13

By Lawrence G. McMillan

The rally that began last week with the Fed announcing tapering has broken out strongly to new highs. The fact that this occurred during a seasonally bullish period has certainly helped, too. $SPX will remain bullish as long as it holds above support at 1810.

Equity-only put-call ratios are shown Figure 2 & 3. Both are at new lows now, and as such they are both on buy signals (because they are declining) and they are overbought (because they are so low on their charts).

Weekly Stock Market Commentary 12/20/13

By Lawrence G. McMillan

Even with the volatiilty following the FOMC meeting, SPX still has not broken out of the 1775-1812 range on a closing basis.  If it DOES break out to the upside, the positive year-end seasonality should help.

The equity-only put-call ratios moved to sell signals about a week ago, but those signals are now wavering.

Market breadth gave buy signals earlier this week, but now those two breadth indicators are mixed: one on a buy; the other on a sell.

Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
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