Options

Writing covered calls as a hedge against a drop in the shares of Intact Financial Corporation

As the following graph shows, the share price of Intact Financial Corporation (IFC) seems to be on a downward trend as it has just broken through its previous trough at around $104. Its stochastic oscillator (%K) and relative strength index (RSI) are also trending downward. Since this bearish tren ...

Profiting on a higher share price for Franco-Nevada Corp.

As you can see in the following graph, the price of shares in Franco Nevada Corp. (FNV) appears to have stabilized at around $99, just above the $95 support level, after having fallen almost systematically since November 28 when it peaked at $110.18. This decline pushed the stochastic oscillator, s ...

A horizontal calendar spread to make the most of relatively stable prices for Air Canada shares

After having peaked at $28.70 in October, the price of shares in Air Canada (AC) seems to have slipped into a short-term trough at the $22 support level. Since then, the price rallied to $26 and, as of this writing, has settled in at around $24. Prices from $22 to $28 now represent a trading range ...

Bulling the Market with a Ratio Call Spread

Investors have had a good run over the last two months as we have seen the Canadian TSX 60 index roar higher 9% from a September low of 877.00 to its highs near 955.00.  The question on everyone’s mind – is it over or is there more room to go?  Is it too late to buy or should an investor wait ...

Make the Most of a Decline in Canadian Pacific Railway Limited shares

As you can see in the chart below, the price of Canadian Pacific Railway Limited (CP) stock is beginning to show the signs of what looks very much like the early stages of a correction. It is clear that the MACD and RSI indicators and the stochastic oscillator are all in marked decline. If this is ...

Selling put options to profit from rising prices for shares of Agnico Eagle Mines Limited

As the following graph shows, the price of shares in Agnico Eagle Mines Limited (AEM) appears to be on the verge of an upswing of unknown vigour. This new trend is confirmed by three indicators – the MACD, the RSI and the stochastic oscillator (%K) – that are giving clear signs of strength. Dai ...

Implementation of a collar to protect profits accumulated in Royal Bank of Canada shares

As you can see in the following graph, the price of shares in Royal Bank of Canada (RY), much like the financial sector in general, have shot up over 10% in just six weeks. Even though it is always risky to expect a trend to reverse, such growth cannot continue indefinitely. However, considering th ...

Understanding Options Vega

Prior to understanding Vega, we need to quickly review option-pricing models. The options pricing models are mathematical formulas that help investors and traders remove the guesswork from determining an options price. The models make some assumptions, primarily that stock prices are random and tha ...

A Repair Strategy for Loblaws Companies Limited stock

Daily graph of L ($67.11 on Tuesday, September 26, 2017) As you can see in the above graph, the price of Loblaws Companies Limited (L) shares fell 18% from a peak of $78.85 on May 8, 2017, and then bottomed out at $64.65 on September 8, 2017. Since then, we have witnessed a tentative rebound tha ...

Making the most of a potential rebound in shares of Intact Financial Corporation

Daily graph of IFC ($100.37 on Wednesday, September 13, 2017)   As you can see in the above graph, the price of shares in Intact Financial Corporation (IFC) fell $3.96 from a peak of $103.03 on September 1, 2017 and then bottomed out at $99.07 on September 12, 2017. We can also see that the RSI ...