It is not really a fixed number for any specific option on a stock. It depends on what the current open interests are and that can vary from month to month. What you look for is any open interest for a particular strike or group of strike prices that is head and shoulders above other […]
The S&P 500 is market cap weighted. That means those stocks with the largest capitalization have the most impact on the index movements. If you take out a stock whose market capitalization has tanked and replace it with a stock with a larger market cap, the value of the index will rise. What fund managers […]
It is our general rule of thumb to buy options with 100 or more open interests primarily because that allows us to better use stop losses and shave the spread. In order for a stop on an option to work it has to be triggered by a sale at that level. If there are not […]
Ah, secular bear markets, secular bull markets. The idea is that these are long term cycles in one direction of the other. Bear, long term downtrend. Bull, long term up trend. The bull market that ended in March 2000 was a secular bull market that covered two decades. Some say shorter as it was broken […]
WTRS announced a 3:2 split with a stock price just below $11. One of the ways a stock can make strong moves higher is to attract institutional investors. Institutions buy large blocks of stock in order to be efficient. If a company does not have adequate float, institutions cannot buy that stock even if they […]
The put/call ratio measures the number of puts traded versus the number of calls traded in a given session. First thing to understand is that the put/call ratio is a sentiment indicator. It is a super sentiment indicator so to speak as option traders, as a whole, tend to be speculators. They buy out of […]
Money flow has many different heads to it. We look at Bloomberg money flow and TC2000 moneystream when determining money flow levels for our stocks as we have watched them over a long period of time and are comfortable with what they show. There is a caveat on all money flow readings, however: they work […]
Your observations on the breakout are right on target: many times the price is met before the volume is met. As volume levels and intensity vary throughout a session it is often difficult to determine where the volume is exactly. It is easy at the end of a session or if there is an immense […]
There has been selling all the way down punctuated by periods of buying. In each case the selling has overcome the buying ultimately and pushed the stocks lower. There are mutual funds still dumping shares as we saw with WCOM and ORCL on very high volume, and other tech stocks as well as they continue […]
It is hard to pick bottoms in terms of an absolute number. That is one of the things that gave technical analysis a bad name (e.g., the Dow will be at 11,323.73 on February 4, 2003). One thing to remember when looking at P/E levels: it is not just price but earnings. If you look […]
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