Issues
With the calendar flipping to 2025 and the long holiday weeks/weekends behind us, most traders will be back at their desks starting today. Let the fun begin!
This week and next week’s Monday morning Week in Review will be focused on position updates so that I can spend the last two weekends of the year with my family. Then starting the week of January 6th, it’s back to full blast for the Cabot Options Trader and Cabot Options Trader Pro service.
The breadth worries that had so many traders on edge finally reared their ugly head and took a bite out of the market as the indexes took a big hit on Wednesday. By week’s end things had improved a touch, but still the S&P 500 fell 2.45%, the Dow lost 2.54%, and the Nasdaq declined by 2.71% last week.
For the second straight week the leading indexes went in vastly different directions as the S&P 500 fell 0.6%, the Dow lost 1.9%, and the Nasdaq gained 1%.
It was another interesting week for the market as the Nasdaq rallied 3.3%, while the S&P 500 added 1% and the Dow fell 0.6%. That is quite the performance difference between the Nasdaq and Dow!
The holiday-shortened week yielded more gains for the leading indexes as traders ready themselves for the close of 2024. Here is how our positions performed last week.
Despite some early morning sell-offs nearly every day last week, the bulls stepped up each time, and by week’s end the S&P 500 had gained 1.6%, the Dow had rallied 2%, and the Nasdaq had added 1.55%.
Not surprisingly the post-election market wiggles continued last week as many stocks and sectors continued to show strength, while others got hit hard. By week’s end the three leading indexes had all lost ground as the S&P 500 fell 2.3%, the Dow declined by 1.7%, and the Nasdaq lost 3.65%.
The election results and Federal Reserve rate cut were seemingly just what the market was looking for as the S&P 500 rallied 4.7% last week, the Dow added 4.65% and the Nasdaq gained 5.4%.
Before I dive into my election preview, I first wanted to address Palantir (PLTR) earnings as the company will report its quarterly results today after the close.
Ahead of a monster week of economic data and earnings releases the S&P 500 fell 0.85%, the Dow lost 2.6%, and the Nasdaq gained 0.4%
Another week, another all-time high for the S&P 500 and Dow, while the Nasdaq is slowly creeping towards its previous highs. By week’s end the S&P 500 had gained 0.6%, the Dow had rallied 1%, and the Nasdaq had risen marginally.
Recent Alerts
Options Strategy
Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.
Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.
A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.
Using Options to Hedge a Portfolio
A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.
A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.
This guide will help you execute the options strategies recommended in Cabot Options Trader.
Options Education
As the market was falling apart and the VIX was exploding to multi-year highs, Cabot Options Trader Pro subscribers executed a short volatility trade, selling an Iron Condor. Here are the details of the trade and some of my commentary.
Bitcoin and crypto- related securities have been the talk of the trading world for weeks as the value of these new digital currencies have skyrocketed. And with the value of the coins’ rise, there’s been massive moves in the share prices of companies that are involved.
I’m often asked about the difference between Cabot Options Trader and Cabot Options Trader Pro, so here I explain the difference so that you can choose the right service for your needs.
As the market was again making new highs yesterday afternoon, I received a question from a reader asking about how I handle winning trades. It’s a great subject.
I received a great question this afternoon that I thought I would share with all my subscribers. The reader’s question was regarding the buyer of 30,000 October 40 Calls, and my writing that the trader needs the stock to rally $5.50 in the next 24 days to break even on the trade.
Jacob explains how insurance stocks’ behavior when a hurricane is approaching and after it has past is similar to how earnings or drug announcements can cause big moves in other stocks.
A bull risk reversal trade brought Hewlett Packard Enterprises (HPE) to Jacob’s attention back in June. Bull risk reversals are a favorite tool for hedge funds and are just about the most bullish trade you can execute using options because both components of the trade are bullish.
As the Nasdaq has fallen by approximately 5% in the last several weeks, and many stocks have fallen by much more, I’ve received many emails about how to play these stocks. For example, “Jacob, how would you recommend getting long XYZ at these depressed levels?”
Oftentimes after making a buy-write recommendation, I get questions on how I choose the strike to sell. So I thought I would go through my thought process with this trade.
Today I want to share with you the story of my greatest trade. And it was pure luck!
Not many people outside of my old company know about this trade—it’s the greatest trade I ever witnessed.
As a trader on the Chicago Board of Options Exchange (CBOE) for more than 10 years, I witnessed and heard many unbelievable trading stories.