Education Center
Sometimes you give trade with options that are in the same month expiration and in others you have an expiration two or three months out. I have heard you make more money if you buy in the same month expiration as the current month.
The closer an option is to its expiration, the more volatile it is. That means it will move more up or down in value with movements of the underlying stock than an option that has an expiration three months further out for the same strike price on the same stock. The problem with near term […]
Where do you get your information on the Put/Call Ratio (CBOE)?
The CBOE website contains a summary of daily activity. It can be found at www.cboe.com under the ‘Market Data’ heading.
[There has been an increased] noise level very recently about US troops moving into Iraq and Turkey. I would really like to hear your take on market reactions if/when there is an escalation on the part of US. It seems imminent that this is the situation. I’d like to be better prepared to know how to prepare and respond for such an event!
The rumors have been flying, and have struck two times when the indexes were having decent rallies. Short sellers have good timing. Anyway, if we do send troops into Iraq there will be uncertainty. Uncertainty about a new campaign while another is still ongoing, uncertainty about reprisal attempts, uncertainty about the outcome. The stock market […]
Could you not buy puts or go short for NVLS if you don’t already have a position?
Last night we were looking at NVLS as a covered call candidate on the Daily as a stock we had previously taken positions on and was ripe for a pullback. We know that stocks will inevitably pullback no matter how strong they are, and if we are going to hold onto the stock during the […]
You mention candlestick charts quite frequently. Do they make up an integral part of your analysis? Where can I learn more about them?
Candlestick charts are an important part of our analysis of any stock. There are several reasons. For one, once you get comfortable with what they are showing, you can get a much quicker idea of what the momentum of a particular stock is. They are frequently very accurate in showing us quickly if there is […]
What is a normal course issuer bid, and how might it affect the price of a stock?
A company makes a normal course issuer bid when it wants to buy back its own shares. The bid is filed with securities regulators outlining the amount of stock the company proposes to buy over a given period of time. The company is not bound to do so, and typically the bid will be for […]
I was wondering if Jon L. Johnson and his team watch or listen to any financial stations throughout the day? If so, which are the better ones to listen to for reasonably unbiased information (if there is such a thing in financial reporting)?
Yes we listen to the financial stations to get an idea of what is being said to the rest of the world about the day’s action. That is the primary function: we want to know what the analysts are saying, what the fund managers and CEO’s are saying. Are they bullish or bearish? What are […]
In your Jan 22 daily newsletter you indicate the possibility of a 50% retracement for all the indices. Yet at market close on the 22nd, the retracements were S&P 500 24%, the Dow/Jones Industrial Average 28%, NASDAQ composite 30% and the SOX a 40% retracement. Given these values doesn’t it seem likely that each index will have its own retracement level? It seems unlikely that the SOX will wait for the S&P to catch up! What should an investor look for in the retracements that you believe that are coming?
First I want to say that I did not see this email until after tonight’s summary was written. With that said, it is a very good question. The indexes ARE selling down at different rates, and the S&P has retraced 76 points (65%) of the 50% of the move off the bottom (about 232 points; […]
In your reports you will mention for some options whether there is low open interest or no open interest. How am I supposed to interpret this?
Open interest tells us how many options contracts are open. We look at open interest because it tells us the liquidity of a particular option. If there is low liquidity, there is typically not going to be the same opportunity to ‘shave’ the spread – that is, get a price inside the ask if you […]
Why is the following considered bearish: Head and shoulders patterns are stated as signs of a turndown in your newsletter, but that pattern looks like a base, a surge, and a then pullback. So what is so bad about that (as long as it doesn’t break support)?
The reason stock patterns are useful in foretelling stock movements is that they represent in a graph how investors view a stock. Understanding investor sentiment as shown in a stock chart is one of the keys in understanding stock movements. In our online seminars we discuss each signature pattern and explain what to look for […]
