Trade in Groups

The bearish outlook given yesterday was based off a combination of general economic data (fundamental) as well as a handful of indicators about market internals (technical). The underlying theme here is that the leaders into this crisis – namely, real estate and financials – have not yet hit a bottom (or at least need to re-test lows).
 
The […]

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This recent post on the TradeKing community site got me thinking about current sentiment among traders, and what implications (if any) it has for the markets going forward. Regular readers have seen bearish stances over the past several months on financials and energy, along with a focus on alternative strategies to earn profits when the […]

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This series on commodities has taken a detour or two, but the recent explanation of how to use a covered call strategy brings us back to one of the original points about commodities: when used in combination with other strategies, they can both provide income and change the correlation of a portfolio.
 
A problem traditionally associated […]

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An area of opportunity for individual investors that we’ve only touched briefly on so far is traditional options. This article assumes you have a basic understanding of call options – if not, a few quick primers can get you up to speed – see here for a basic long call, and here for covered calls.
 
There […]

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The financial world has seen many innovative products in the last several years – but unlike many of the structured finance acronyms we’ve come to know for their ability to destroy wealth, ETFs (exchange-traded funds) are of great service to investors. They allow rapid diversification into a defined type of stocks, commodities, or currencies, and […]

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One thing we have focused on heavily in the last month is presenting strategies used to create absolute returns – that is, manage risk and turn trading profits regardless of the general market’s direction. It’s a difficult market, and the days where simply owning a handful of hot tech or commodity stocks could result in […]

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A recent email from Steve Jobs to Apple (ticker: AAPL) employees announcing his medical leave of absence has left some investors in a bit of a tizzy. While the email promises a summer return, some have been hesitant to immediately accept the pledge. The concern and even distrust over Jobs’s departure most likely stems from […]

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In the previous article introducing commodities, one strategy that was mentioned was relative value trading using long positions paired with short positions. A benefit of this strategy is that having both long and short positions can help offset broader market moves; for a more detailed explanation see “Absolute Returns for Individual Investors: Long/Short”.
 
When the topic […]

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As the established order of the financial system underwent upheaval in 2008, the Federal Reserve responded by greatly expanding its balance sheet, ostensibly to provide liquidity to a number of strained markets. This means that, after holding Federal Reserve credit outstanding just under $900 billion for most of 2008, the Fed’s expansionary policies mean it […]

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Last time, we examined how options on index volatility (such as the VIX) could possibly function as an attractive asset class because of its unique nature and diversification benefits. This is supported by a 2007 Goldman Sachs research note, although their particular strategy relied on institutional tools like variance swaps and volatility forwards – individual […]

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