Entries by majcash

Restaurant Stocks and Amazon

The Amazon (AMZN) effect has decimated countless retailers in recent years. As more and more consumers buy online at Amazon and avoid the malls, shares of Macy’s (M), Nordstrom (JWN), J.C. Penney (JCP), L Brands (LB), Foot Locker (FL), and many other retail stocks have been very publicly crushed. But there’s another, less well known mall-related […]

Options Education: Time Decay

Options Education: Time Decay All options are a wasting asset whose time value erodes to zero by expiration. This erosion is known as time decay. Every day of an option’s “life,” it loses value as the time it has to finish in-the-money passes. That said, let’s turn our attention to the calendar. The stock market […]

Option Order Flow

When I was a trader in the pits on the Chicago Board of Options Exchange (CBOE), I learned very early to stay out of the way of the smart traders at Goldman Sachs and Morgan Stanley. For example, when a Goldman Sacks broker came running into my pit screaming that he needed a market on […]

Covered Calls on Best Dividend Stocks for 2017

On Tuesday morning, Cabot Dividend Investor chief analyst Chloe Lutts Jensen released her Best Dividend Stocks for 2017. Her recommendations were U.S. Bancorp (USB), which yields 2.1%, and Caterpillar (CAT), which yields 3.1%. But if you employ an options strategy, you can significantly boost those yields—to 4.3% and 5.9%, respectively! I give you all the […]

Why I Bought $SPY Puts

In the last several weeks, I have been growing more and more concerned with the market. I had a hunch that the market was due for a fall, and so I added S&P 500 ETF (SPY) put options to my Cabot Options Trader portfolio. What did I see that had me concerned about the market? […]

Why Weekly Options are Like Gambling

When I was a young hotshot, trading on the floor of the Chicago Board of Options Exchange (CBOE), I would make markets in Google (GOOG) and Bank of America (BAC) in the morning, and some days, jet off to Las Vegas to play poker, craps and blackjack in the evening. Those were the days of […]

Three Day Rule – Trading Stock Disasters

I began my career on the floor of the Chicago Board of Options Exchange in 1999 straight out of college. For a year, I stood next to two trading legends, soaking up all of their wisdom as their clerk. That year, the market ripped higher as virtually every dot-com stock exploded higher day after day. […]

Bear Call Spread

Bear Call Spread A Bear Call Spread is is an options strategy used when a decline in the price of the stock/index is expected, or a significant move higher is unlikely. This strategy involves the selling of a call at a lower strike price while simultaneously buying a call at a higher strike price. The […]

Option Terminology

What is an Option? An option is a contract that allows you to buy (call option) or sell (put option) a certain amount of an underlying stock (usually 100 shares unless adjusted for a split or other corporate action) at a specific price (strike price) for a set amount of time (any time prior to […]

Option Volatility and Decay

One of the most important inputs for pricing options is volatility.  And when I speak of option volatility, I’m sure for some readers it’s a difficult concept to grasp.  When thinking about option volatility just think of supply and demand.  If there are lots of buyers of an asset the price will likely go up. […]