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Is Main Street Finally Catching on to Options?

December 26, 2011
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Is Main Street Finally Catching on to Options?

A few weeks ago, I had the pleasure of going to lunch with Tim Lutts, the president of Cabot. Fortunately for me, Tim was in Miami for a conference and I didn’t have to travel up to the office in Massachusetts during the month of December! During our lunch, we discussed the market and how pathetic the volume has been for stocks lately. Our conversation turned to options and whether there had been the same kind of drop off in volume. This simple conversation sent me down a path that led me to some pretty staggering findings. After doing...

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How to Profit from Another Possible U.S. Debt Downgrade

November 1, 2011
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How to Profit from Another Possible U.S. Debt Downgrade

Back on August 5 after the market closed, Standard & Poor’s downgraded the United States debt rating from AAA to AA+. This was an important date for investors because the S&P 500 dropped the following Monday and Tuesday, establishing the lower rail of the trading range we were in from the beginning of August until recently. When the downgrade was announced, politicians were in an uproar. Republicans blamed President Obama and the Democrats for their spending. Meanwhile, the Democrats blamed Republicans and their insistence that taxes not be raised. Let’s face it, both parties are more a part of...

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Weighing the Evidence

September 27, 2011
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Weighing the Evidence

Last week, I had the opportunity to report for jury duty. (I know there are hundreds of jokes that can be inserted here, but I’ll spare you.) I was put in a jury pool for a burglary case and listened as the judge, the prosecutor and the defense attorney took turns asking questions of the potential jurors. In the end I was not selected to sit on the jury, but I learned something that I think can relate to the stock market. Because this was a criminal trial and not a civil trial, the defense attorney pointed out numerous...

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One Advantage of Options: Less Exposure

August 30, 2011
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One Advantage of Options: Less Exposure

My first article for Cabot Wealth Advisory appeared back on December 27, 2010. As the editor of Cabot Options Trader, I intended to educate subscribers about options–perhaps dispel a few myths and point out some of the advantages of options. One of the main appeals of options is that they provide the investor with leverage. A move of 5% to 10% on the underlying stock can easily generate a gain (or loss) of 80% to 100% on an option. And options allow investors to participate in the market with a smaller cash outlay. Here is what I wrote: “Options...

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Why Europe Will Likely Outperform the U.S. in the Coming Months

July 28, 2011
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Why Europe Will Likely Outperform the U.S. in the Coming Months

The last month was fun for the equity markets–if you like volatility. We saw stocks rally sharply from mid-June until early July and then fall for a week and a half as the Greek debt bailout struggled to garner approval in Europe. Subsequently, attention turned to the debt ceiling debate here in the U.S. The political wrangling and grandstanding has left investors feeling a little uneasy. The recently approved bailout package for Greece took one concern off the table. As I write this, the debate continues to rage in Washington with neither side understanding the word “negotiation.” While I...

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