It was yet another strong week for the market and countless stocks, many of which are breaking out to new highs. At some point the market may cool off, but for now at least, I’m not seeing any truly worrying signs. And in fact, the S&P 500 closed at a new record high as the index gained 1.44% on the week, while the Dow added 1.56%, and the Nasdaq rallied 1.63%.

Despite plenty to worry about in the market including the rising tensions in the Middle East and the short-lived port strike, impressively the S&P 500, Dow and Nasdaq all rose marginally last week.

It was a mostly quiet week for the market, which isn’t terribly surprising as traders have moved past the Federal Reserve event and inch towards the election. By week’s end the S&P 500 had gained 0.4%, the Dow had rallied 0.5% and the Nasdaq had fallen 0.55%.

As I noted last week, because of family travel this Monday’s update is focused on our open positions. Let’s dive in …

The market bounced back very nicely from the previous week’s losses, ahead of the big Federal Reserve announcement this week. By week’s end the S&P 500 had rallied 3.2%, the Dow added 1.9%, and the Nasdaq rebounded 4.9%.

Led by an awful week for the Semiconductors (down 11%), the S&P 500 fell 3.62% last week, while the Dow lost 2.42%, and the Nasdaq dropped another 5.5%.

Ahead of the long weekend, and the unofficial end of summer for the trading community, it was a mostly quiet and mixed week as the S&P 500 was unchanged, the Dow gained 0.9%, and the Nasdaq fell 0.7%.

The many stock market worries of just three weeks ago appear to be a thing of the past as the S&P 500, Dow and Nasdaq all gained just over 1% last week, and all are now within striking distance of all-time highs.

Before I dive into this morning’s Cabot Options Trader Weekly Update, I wanted to bring to your attention that the Mintz family will be traveling to Europe this Wednesday through the following Wednesday.

And while I will be offline in terms of trading, answering questions, and the Daily Order Flow list, I will keep a distant eye on our positions and if we need to act, I will send instructions.

Please note, S&P 500 futures are indicated lower by approximately 4.5% this morning, while the Nasdaq is looking down 5.5%. I go into some of the reasons why below.

Regardless of the reasons, I do not expect to buy or sell many positions today. Instead, as I’ve said for weeks as the trading action had become murkier, I continue to preach patience.

Moving on to our Week in Review …

Going into last week we knew it had the potential to be a wild five-day stretch, and the market didn’t disappoint as the indexes swung violently, and sector rotation was intense. By week’s end the S&P 500 had fallen 1.55%, the Dow had rallied 0.5%, and the Nasdaq had lost 3.8%.

Led by a steep decline in the formerly red-hot Semiconductor sector, the market had a somewhat “gross” five-day stretch. For the week, the S&P 500 fell 2.35%, the Dow rose marginally, and the Nasdaq lost 4.35%.

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.

This guide will help you execute the options strategies recommended in Cabot Options Trader.

Guide to Options Trading

Recently, I decided to hold our Visa (V) calls through earnings and sold our Coca-Cola (KO) calls the day before their earnings announcement. I thought I would break down why I decided to take the risk in V, and not in KO.

Yesterday, as the S&P 500 was heading to a 1.2% loss, a trader was aggressively selling April puts in many retailers. Here’s an explanation of put-selling.

Today, I tackle one of the questions I get most frequently: What is the difference between Cabot Options Trader and Cabot Options Trader Pro?

Every three to six months, I will revisit some of the important themes and strategies used by Cabot Options Trader since I became the editor.

Buy-Writes vs. Naked Puts

Cabot Options Trader Pro Editor Jacob Mintz on how selling calls through volatility can be a powerful tool.

In a Bull Risk Reversal, the investor buys the call and sells the put. It’s an ultra-bullish position as buying a call is a bullish position, and so is selling a put.

A Covered Call is a strategy in which the trader holds a long position in a stock and writes (sells) a call option on the same stock in an attempt to generate income.

All options are a wasting asset whose time value erodes to zero by expiration. This erosion is known as time decay.