$SPX managed to climb above the 2880 level this week and moved above 2900. Our initial estimate of resistance in the 2850- 2900 area was thus overcome, and the declining 50-day Moving Average was overcome as well. Now the next resistance level seems to be at 3000, which is where the declining 200-day Moving Average is.
This article was originally published in The Option Strategist Newsletter Volume 6, No. 2 on January 22, 1997.
In this article, we're going to take a look at the strategy of selling options. Just how profitable it is, and some of the considerations for naked selling or for using credit spreads. With option premiums inflated in many markets because of increased volatility, this seems like a timely topic. I'm not specifically including covered writing in this discussion, but since a covered call write is equivalent to selling a naked put, you can apply any of the commentary that pertains to naked put selling.
This article was originally published in The Option Strategist Newsletter Volume 19, No. 12 on June 25, 2010.
Options have many uses, but a primary one is that they are built to be a hedge for many investors and traders – in order words, to take some uncertainty out of a particular trade or strategy. This is a well-known fact for professional traders, but less so for the novice option trader or – even worse – the investor who doesn’t use options because he considers them to be strictly a speculative vehicle.
Join McMillan Analysis Corp. president, Lawrence G. McMillan, as he discusses the current state of our option-oriented indicators and what they are saying about the stock market.
Stocks have continued to rally, for the most part, although the rally was beginning to break down a bit technically until a positive news report about an antiviral for the coronavirus sickness spurred an 80- point rally in S&P futures overnight.
We continue to feel that the 2850-2900 range on $SPX represents some resistance. There is more or less resistance all the way up to the next significant level, at 3010 (which is also where the 200-day moving average is).
This article was originally published in The Option Strategist Newsletter Volume 17, No. 13 on July 11, 2008.
The decision to set up a hedge to protect one’s stock portfolio is never an easy one. When times are good and stocks are rising, investors are loathe to spend the money required to hedge their positions. When times are bad, and the market is dropping, the cost of hedging increases. However, that fact is usually understood by investors, who might not mind paying a little more for insurance once it is obvious that stocks are no longer rising, in general. However, another impediment to hedging usually surfaces at that time: an investor fears that he has waited too long, and thus doesn’t want to buy insurance right at the bottom of the market’s decline.