The long-awaited breakout over what had become triple resistance at 4100 has occurred. $SPX closed above that level on February 1st and then added another strong day on top of that on February 2nd, thus confirming the breakout with a two-day close above 4100. That should lead to a challenge of the next resistance levels. First, there is the gap just above 4200 that created the island reversal back in August, which led to the downward leg into October at that time. Next up after that are the August highs at 4300.
I met David Lucterhand when we were both freshmen living on the same floor in the H-1 Dorm at Purdue in the fall of 1964. A few years later, on my first visit to the CBOE – in November of 1974 – I was on the small trading floor in the old smoking room. To my surprise, there was David Lucterhand, making markets on the CBOE. I called David this week to get some of his remembrances of the early days:
This article was originally published in The Option Strategist Newsletter Volume 4, No. 12 on June 21, 1995.
With the market being so high, many individual investors and institutional money managers as well are wondering what to do with these profits. Completely exiting the market is not a viable alternative for many, and is prohibited by charter for some institutions. However, there is a way in which one can reduce his downside exposure while still retaining upside profit potential — he can sell his stock and replace it with LEAPS call options.
Join Larry McMillan as he discusses the current state of the stock market on January 30, 2023.
Stocks have moved back and forth through several supposed minor support and resistance levels this week. As a result, the picture has developed into that of a wider trading range, awaiting a breakout in one direction or the other. On the upside, there is double resistance at 4100, where the market topped out twice in early December. On the downside, there is support in the 3760-3800 area, where the market bottomed in late December.
The following is a remembrance of the early days of listed option trading, written by my good friend, who was an arb at Paine Webber.
In February of 1974, I finished my four-year hitch in the Air Force and was able to parlay my degree in math into a position in the Arbitrage Department at PaineWebber, which was looking to add options trading to their risk arb and convertible bond efforts.
This article was originally published in The Option Strategist Newsletter Volume 4, No. 13 on July 13, 1995.
Most option traders quickly realize that time is a very heavy factor weighing on the price of an option. This lesson often is driven home after buying an option and losing money.
Join Larry McMillan as he discusses the current state of the stock market on January 23, 2023.
I had been trading over-the-counter options for some time, ever since having read the book “Beat The Market,” by Edward Thorp (yes, the same guy who originally figured out how to properly count cards in blackjack and had also written “Beat The Dealer.”) Sometime in mid-1973, my broker Ron Dilks, called me and said that he had read an article in Business Week about listed stock options. It was about the Chicago Board Option Exchange (CBOE), which had begun trading listed options a few months earlier, in April of 1973.
Stocks started the year off strongly, rallying with expanding breadth and favorable put-call ratio buy signals. However, in the end nothing changed as once again $SPX was unable to penetrate through the downtrend line that defines this bear market, as well as failing to rise up through its declining 200-day moving average. So, stocks have fallen back from there. The first support level at 3940 has been violated, and the next one at 3900 might be in jeopardy, too. That leaves 3760-3840 as the next support area. A failure there, and one can state with certainty that the bear market has resumed.