Trading Blog

Selling Options: When Do You Receive the Premium?

Options premium is often a confusing topic for those newer to this form of trading, particular when it comes to selling (often called “writing”) options. This should first be prefaced by saying that it’s never a good idea to sell options naked. In other words, don’t sell options without having the underlying position covered. There […]

Trade Idea: Delta Hedging

Delta hedging a single position in your portfolio – or even delta hedging your entire portfolio – is a relatively common strategy. It involves options, which are equity derivatives. The philosophical basis behind delta hedging is to be price neutral to a market rather than be directionally biased. Delta Hedging At the beginning of December, […]

How to Determine The Direction Of Financial Markets

How to determine the direction of financial markets? Focus on who’s buying and who’s selling. Too many who invest in stocks (and other financial assets) focus on relative valuation metrics and whether something is cheap or not. What a company is earning right now or has recently earned doesn’t matter. That’s already baked into the […]

11 Reasons Why Long-Term Traders Shouldn’t Fear Brexit

Brexit is a regular theme in the European financial press. It’s one of the most consequential geopolitical events so far this century. For day traders, the uncertainty can create related Brexit trading opportunities in UK assets (for the basic fact that their prices are more volatile). But for owners of UK financial assets, you probably […]

Is US Housing A Good Short?

Is US housing a good short (again)? It’s a topic of discussion among some observing home prices increase in excess of wages. But before we get into that, it would be helpful to cover where we are in the economic cycle. First, the macroeconomic backdrop: – US economic growth is slowing; growth will slow significantly […]

The Most Common Trading Mistake?

In trading, both at the retail and institutional level, the most common trading mistake is believing that what happened in the past is likely to happen in the future. Too many traders look at what’s worked in the past and assume it will continue to work. On top of that, they leverage that up, creating […]

The Coming Squeeze in Financial Asset Returns

As a day trader, you probably don’t pay a ton of attention to the longer-term picture. Or else you do but it takes a backseat to what’s going on in the present with respect to your trading. Day trading is inherently a form of trading where positions are open for short durations (a day or […]