So, option activity in Procter & Gamble (PG) has been extremely high for days now, first ahead of earnings, and now in advance of their merger with Folgers. The stock is 16% off its recent lows, and has been unusually volatile over the past two months along with the rest of the universe. The interesting thing here, though, is that with all this unusually high option activity, you might expect implied volatility to be hitting new highs as well. But as…
Tuesday, August 12, 2008
Here are some data that have us thinking this afternoon: maybe the Nasdaq doesn’t resume its parabolic move from here. There are certainly plenty of short term reasons for Nasdaq bulls to frown and doze off for awhile: the QQQQs are up over 7% in 7 days. Money flow has been stagnant. The ADX line is only barely ticking up, and RSI readings at various periods are all inching toward overbought. The McClellan Oscillator (attached) may have peaked, and even if…
Monday, July 28, 2008
Ryanair (RYAAY) is down about 25% today after it warned that it would miss expectations for Q1 and would probably post a loss for 2008. The reason? They deliberately refused to hedge their exposure to oil prices… Ryanair said last year that it would not hedge against the rising cost of oil last year, unless fuel prices fell below $100 a barrel. …oh, until now, that is: However on Monday, O’Leary said the airline was now hedged 90.0% for September, at $129…
Thursday, July 24, 2008
The inverse relationship between oil prices and equity markets still seems intact: as crude has sold off over the past week, markets have lifted, and some analysts have even tried charting an hour-by-hour mapping of the correlation. While we’re long-term bullish on oil (how could anyone not be?), we don’t anticipate an immediate or intense turn around in crude prices. At the same time, while the price of oil could certainly drift a bit lower, we don’t foresee any catalysts…
Tuesday, July 22, 2008
In another month of fast-moving, trending price action—one of the two worst scenarios for the Calendar Options strategy (the other being a plunge in implied volatility)—we were able to come away with only a small average loss. We played it cautiously from the beginning, expecting the resumption of the bear market to keep price volatility high throughout the cycle. Consequently, we entered just two trades for July. We had to make one adjustment by the time July rolled around, but both…
Thursday, November 6, 2008
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