Posts tagged as Options

Options 101: Understanding the Stock Replacement Strategy

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Another week, another speculative record

Last week, the smallest of options traders bought a record number of call options to open.

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Options traders once again set speculative records

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A Strategy for When (and if) the "Bubble Bursts"

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More than 1 trillion served

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Treasuries tumble, and traders are betting on more

The 20-day put/call ratio on 10-year Treasury notes has climbed to its 2nd-highest level on record.

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Options speculators are outspending hedgers 3-to-1

Last week, the smallest of options traders spent $3.50 on opening call purchases for every $1 that was spent on puts.

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No letup in leverage

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Lots of speculation, very little hedging

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As small stocks (almost) double, optimism peaks

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As smart money sells, option speculation hits record high

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Among the smallest of traders, this is different than August

The smallest of options traders continued to buy speculative call options last week, but they didn't pull back as much as August in buying puts.

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Small options traders come back as buyers press

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Options traders pull back as Dumb Money loses confidence

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Options traders are pricing in fear, while others bet against it

The VIX has jumped more than 10% on 2 out of 3 days, as VIX options traders bet that it's going to decline in the months ahead.

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Options traders pull back

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Speculative behavior makes a comeback

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Traders are buying calls on stocks but puts on indexes

In an odd twist, options traders are focusing heavily on calls on individual stocks, but puts on indexes.

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Traders seem positive on stocks, negative on indexes

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Traders suddenly scramble for lottery-ticket hedges

When stocks rallied hard earlier this week, a measure of far out-of-the-money put premiums jumped as traders scrambled for protection.

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Small options traders are coming back

After getting slapped in September, the smallest of options traders are back trading speculative contracts.

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SPY gaps and tail hedges

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Options traders just won't quit

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Options traders won't be deterred

The smallest of options traders increased their bets on a market rally last week, even as stocks declined.

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Once again, options traders show no fear as losses mount

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Options speculators pull back but are still jaw-droppingly aggressive

Even though stocks have pulled back, options traders continue to greatly favor speculative trades over hedges.

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Stocks wobble, but options traders aren't losing faith

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The smallest traders are the biggest players

Contrary to the current narrative, the smallest of options traders are by far the biggest influence in the options market.

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Swallowing a chunk of unnatural supply

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Speculative options traders double down during a bad week

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Massive surge in speculative trading - AGAIN

Last week saw yet another surge in speculative options trading, accounting for the equivalent of 12% of NYSE volume.

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Once again, traders reach for speculative options

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Speculative options traders return

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Two common sentiment indicators are in complete conflict

Put/call ratios are low, showing a lack of hedging and a lot of confidence among traders. But the AAII survey is showing extreme pessimism. Who to trust?

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Investors are pessimistic, but buying speculative options

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As options volume explodes, penny stock trading picks up

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Options traders set new speculative record

Last week, options traders returned to extremely speculative positioning. Among the smallest of traders, speculation was heaviest.

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Options traders keep setting new speculative records

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Black swan risks are rising

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Small traders keep up their record speculative buying binge

Once again last week, the smallest of options traders pushed their leveraged, expiring speculative bets on a rising market.

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Speculative options activity becomes even more astounding

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Weekly Wrap: Even more speculation as breadth continues to improve

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Gamma exposure

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Small options traders are in a frenzy

The smallest of options traders bought to open a stunning number of speculative call options last week, by far an all-time record.

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Options traders make stunning bets on rising prices

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Weekly Wrap: Short-term speculation within long-term recovery

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Small traders are buying call options and selling futures contracts

Small traders are buying a record number of speculative call options, but they're also shorting a record number of futures contracts.

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Small traders keep pressing their bets...both ways

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Weekly Wrap: Signs of speculation continue to pop up

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Options traders have been very confident

Over the past few sessions, traders have turned over less than half the number of put options as call options, a sign of optimism.

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The options market hasn't done this since 2002

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Small options traders have never done this before

The smallest of options traders have opened a record number of bullish contracts relative to bearish ones.

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Small options traders establish record bullish bets

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Weekly Wrap: Questionable price and breadth action, with a jump in speculation

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Options traders show comfort with the rally

Put/call ratios are coming down from high levels, and a gauge of overall option speculation is high, especially for a downtrending market.

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Options data shows concern is just a memory

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Weekly Wrap: Mixed sentiment during the continued recovery, with divergent sector momentum

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Small options traders are buying lots of calls AND puts

The smallest of options traders picked up their speculative call buying last week. But they bought a lot of protective put options, too.

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Small traders are buying call options...and puts, too

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One of the worst days in market history

Monday's session was among the worst in 60 years. The put/call ratio jumped to one of the highest readings in history as traders scrambled for puts.

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A week for the ages

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Options traders spend billions betting that this rally won't end

Each of the past two weeks, options traders have spent at least $7 billion in bets on a rally. The Nasdaq's correlation to 1999 isn't exclusive.

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Options traders set new speculative record

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Options Traders Have Never Done This Before

Options traders are buying calls to open and not selling many as an offset. The small-cap Russell 2000 is close to breaking out.

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A Speculative Record As The VIX Gets Squeezed

Call option buying to open hit a new record relative to total volume. The Bollinger Bands on the VIX are getting squeezed.

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Options Traders Are Going All In; Gold Is Almost The Most Overbought Ever

Options traders are buying calls, with speculative activity among the highest in 20 years, and gold's RSI indicator is at a historic extreme.

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Options Traders Are Leveraged After A Good Year-End

After a good end to the year, stocks often struggle, and options traders are leveraged and bullish, with the U.S. dollar breaking down

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Traders Buy Calls As Smart/Dumb Money Plunges

There is now a historic spread between Smart Money Confidence and Dumb Money Confidence, as the Equity Put/Call Ratio plunges.Historic spreadBuilding on a true extreme reached late last week, the spread between Smart and Dumb Money Confidence widened further, stretching to a threshold rarely ...

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Investors' Very (Very, Very) Good Year

The value of household equities in 2019 is going to show one of the best gains on record.Investors’ very good yearThe value of American households’ holdings in corporate equities and mutual funds has surged 25% over the past year to a new high. This ranks 2019 among the very best since 1951.Once ...

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Gamma Exposure At Record High

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Total Put/Call Ratio Very Low

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Maybe Strategists Are Betting On Black Swans

Wall Street strategists aren't very optimistic about 2020, and black swans are on sale again.More apathetic strategistsAnother survey of Wall Street strategists shows that even more of them are lukewarm on the prospects for stocks in 2020. Their average guess is for the S&P to gain a lowly 4%, ...

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ETF Traders Are Fleeing Safe Havens

Safe-have assets have lost funds, and large options traders are betting on a market rally.Haven funds lose assetsOver the past week, stocks jumped, and traders fled haven assets like bonds, gold, and the yen. It’s not just the past week, though – since October, ETF traders have been leaving ...

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Investors Are Leaving As Black Swan Risk Rises

Equity fund flows are negative, and options SKEW is rising.Leaving earlyInvestors have pulled hundreds of billions from equity funds in 2019, despite large gains in the funds. Because the gains have been so large, the outflows are small as a percentage of total assets.Still, it’s an outflow, and ...

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4 Reasons Why A Volatility Event Is On The Horizon

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.Volatility eventSeveral indicators influenced by the options market are throwing off concerning readings, showing that traders have become complacent about ...

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Speculative Options Trading Picks Up

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.Options optimismThanks to a lot of volume in index options, the CBOE’s total put/call ratio dropped to a very low level. Over the past two weeks, it has moved ...

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One Of These Things Is Not Like The Others

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.One of these things is not like the othersOut of the “big four” equity indexes, the S&P, Dow, and Nasdaq are all sitting at new all-time highs. The small-cap ...

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Nightmare Of 2008 Still Haunts Consumers

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.DisbelieversEver since the financial crisis, consumers polled by the Conference Board have shown a consistent mistrust of stocks, with brief exceptions. This ...

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Hedge Funds Keep Pussyfooting Around

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.PussyfootingHedge fund managers appear to have ever-lower exposure to stocks, which has been a theme this year. It’s now on par with the ends of crises in ...

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Wednesday Color - Small-cap outflows, financial & energy breadth, natty drop, energy options

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Monday Color - Breadth whipsaws, small traders, surprise spread, bond sentiment

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Thursday Color - Depressed investors, negative gamma, Anti-Zweig thrust, signs of anxiety

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Gold hasn't done this for a decade

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.Heavy hedgingThe smallest of options traders continue to protect themselves against a market decline to an unusually heavy degree. Last week, they spent ...

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Monday Color - Small traders, dollar sellers, S&P momentum, quarterly run, energy bonds

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Small options traders bought this much protection only 3 times in 20 years

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.Small traders being testedThe smallest of options traders keep buying a large amount of put options. Over the past 6 weeks, they’ve spent more than 24% of ...

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Monday color - Nifty rebound, a rocky week, small traders

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Tuesday Color - Post-Holiday Blah, September After Volatile August, Put Premiums And Climaxes, Mexico

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Sectors In Sync Makes Investors Crabby

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.All up or all downHalf of the days so far this month have seen every major S&P 500 sector move up or down together. This makes it one of the most "all ...

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1 Of The Whippiest, Most Uncertain Months In A Decade

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.A whippy monthOn an average day over the past month the S&P 500 has moved 1%, one of its widest ranges since the financial crisis.When coming soon after a new ...

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Monday Color - A Month Of Swings, Economic Uncertainty, Sectors, Scramble For Protection

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Friday Color - Risk Off, Options Anxiety, Many Lows, Big MOVE, Sector Extremes

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What I'm looking at - Liquidity Premium, Bullish Percent Index, Down Volume, Equity Put/Call, Value Line Geometric Index

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Wednesday Color - Curve, Fund Managers, Gold & Yen, 1% Moves, Skew

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Monday Color - 8 Straight 1%-ers, Large Calls, Corrections, Gold Buyers, Emerging Momentum

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Wednesday Color - Bulls Gone, Put Volume, Energy Drop, Asian Axiety

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Monday Color - Gaps, Volatility Jump, Options Buying, Warning Cluster, Hong Kong

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Wednesday Color - ETF Asset Drop, P/C Ratio, Fidelity Sectors, Warning Signs, Bond Bulls, Debt Contraction, Mexico

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Tuesday Color - Gold vs Yen, Russell Lag, S&P Divergence, Mexican Breadth, Smart Money Selling

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Bullish Options Traders, Buying Climaxes, Silver Flow, Hedgers' Bets, Breadth

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Wednesday Color - Dow Stocks, Dumb Money, Gamma, Microsoft Expectations, Germany

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New Highs Ahead? Leveraged Bets Are Counting On It

Funds buy inWe saw last month that equity hedge funds apparently have a low exposure to stocks on a longer time frame. We also follow macro and commodity-trading funds, which tend to be more aggressive, leveraged, and trend-following with a shorter time frame. And they have suddenly seen the ...

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Small Options Traders Buy Calls

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Monday Color - Discretionary Streak, Fund Exposure, Small Trader Enthusiasm, Earnings Season

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Monday Color - Short-Term Optimism, Funds Vs Options, Lagging Small Caps And Surprises, Bulls Return, Bonds

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Tuesday Color - Fund Manager Panic, New Model, OEX, UAE, Miners

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Monday Color - Tiny Range, Options Traders, A Split S&P, Empire Fail

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Small Traders Buy Record Hedges Even As Financials Surge

Financial recoveryFor the first time since early 2018, more than a quarter of financial stocks within the S&P 500 hit a 52-week high.This kind of a surge has been good for the sector, with gains over the next year every time.In 2000, this jump in new highs among financial stocks led to a 4% ...

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Monday Color - New Highs, Material Gain, Financials, Gold, Small Traders, 5 Straight

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From Risk-On To Risk-Off In Near-Record Time

Risk-on to risk-off in a monthIn April, investors were showing extreme risk-on behavior, according to their eagerness to buy some markets over others. Barely a month later, that has cycled to extreme risk-off behavior.The first risk-off reading following risk-on behavior has usually led to a ...

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Put Premiums Exceed Calls

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Monday Color - Cycle Peak, De-Risking, Silver, Breadth Extremes

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Thursday Color - Junk Flow, Stocks vs Bonds, Anxiety Alerts, Sector Breadth

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Wednesday Color - Gaps, Confidence, Staples, May Loss, Options Fear

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5 Signs Of Anxiety

Anxiety signalWhile stocks have struggled, bonds and the dollar have both been rising. Whether one is helping the other is beside the point – primarily it suggests nervousness on the part of investors.When those two markets have behaved like this over the past 40+ years, stocks have usually ...

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Monday Midday Color - Gaps Again, Sector Divvies, Flight To Safety

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Wednesday Midday Color - Big Outflows, More Hedging, Falling Momo

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Options Traders Just Did Something They've Never Done Before

Call selling hits record lowThe smallest of options traders have spent the past 5 weeks buying to open speculative call options at one of the highest rates since the financial crisis. And they’ve given up trying to collect premium by selling call options, which would limit their upside. That ...

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Uh-Oh, Options Speculators Are Back

Sector battleThe ratio between the S&P 500’s technology and health care sectors has swung by an extreme amount. The 50-day rate of change in the ratio between the two has cycled from negative to a 10-year high.Since 1990, other times it swung like this, tech suffered, while health care held up ...

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Monday Midday Color - Smart Money, Biotech, Options Optimism

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Wednesday Midday Color

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Monday Midday Color

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Stocks, Bonds Rise As Volatility Diverges

A balanced investor’s dreamThe S&P 500’s total return over the past three months is well over 10%. The total return in an aggregate bond index is up over 3% at the same time, a large move for that market.When both markets enjoyed such large total returns over a multi-month period, it tended to ...

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Options Traders Bet On Decline As S&P Meets Target And Utes Surge

Options bets and strategists’ spreadAs stocks rally, options traders have built up a large position in S&P 500 put options, relative to the number of outstanding calls. It’s the opposite in VIX options, where they have few puts and many calls. Since 2006, this has led to a negative annualized ...

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Monday Midday Color

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Catching Up

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Options Bulls Return As Investors Get Whipsawed

Options bulls returnThe smallest of options traders spent nearly 60% of their volume last week on bullish strategies, either buying call options or selling puts to open. That’s among the most aggressive bullishness using real money since the financial crisis.There were some weeks that showed ...

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Monday Midday Color

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Most Stocks Are Rallying; Put Open Interest Is Rising

This is an abridged version of our Daily Report.Stocks are rallyingEven though the S&P 500 is nearly 10% below its high, its Cumulative Advance/Decline Line has rebounded so much it’s almost at a new high.That’s a positive divergence, but historically there hasn’t been much positive about it, ...

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Another Volatile Session

This is an abridged version of our Daily Report.Another volatile sessionSome early optimism on Thursday was quickly erased, and stocks dove to new lows for this move. In the process, it triggered several extremes:* The Nasdaq is on the threshold of a 20% decline.* The percentage of securities ...

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Mexican Stock Collapse; Small Traders Load Up On Puts

This is an abridged version of our Daily Report.Heavy selling south of the borderMexican stocks have dropped 30% from their highs in US dollars and 20% in pesos.This has nothing to do with the politics of the new administration, which admittedly is a big omit. In emerging markets, new ruling ...

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Puts Are Popular; No Sector Funds Are Beating Cash

This is an abridged version of our Daily Report.Puts have become popularSince the market peaked in September, most days have seen at least 10% more put options traded than call options, the largest cluster in three years. Out of a total of 27 days in the sample, the S&P was higher two months ...

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Insiders Buy; A Selling Climax; Small Traders Panic

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V-Shaped Bounces And Explosion In Hedging

This is an abridged version of our Daily Report.V-shaped probabilityFollowing declines like the past month, v-shaped bounces were common. Almost 40% of the precedents formed a bottom within a couple of sessions. While some short-term volatility was normal, all but a few of the precedents ended ...

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A Little Panicky

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Options Bulls Reign As New Lows Rise Even Amid Good Price Momentum

This is an abridged version of our Daily Report.Calling all bullsOptions traders are showing a historic preference for speculating on the upside. In recent weeks and months, they’ve spent most of their options volume on buying speculative calls.At the same time, they don’t want to risk a large ...

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Yields Not Nudging Dollar As Black Swans Get Priced In

This is an abridged version of our Daily Report.Dollar dips despite rate riseThe yield on Treasuries has jumped, but it’s not resulting in a perkier dollar, even though the two usually move in broadly the same direction.The two markets do sometimes decouple, and that has usually led to more ...

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An August High As Option Speculation Ramps Up

This is an abridged version of our Daily Report.Summer highStocks ended August at their highest monthly close in at least 36 months. A new high in August has preceded poor returns during the next 1-4 weeks as September lived up to its reputation. The S&P struggled to hold its gains, especially ...

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Dow's Streak Snapped As China ETF Nears Bear Market

This is an abridged version of our Daily Report.Had to happen sometimeThe Dow Industrials Average ended its 2-year streak of holding above its 200-day average, its 7th-longest streak in an uptrend since 1900.It wasn’t a death knell for the index, especially when the Leading Economic Indicators ...

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Small Options Traders Get Aggressive As Soybeans Fall

This is an abridged version of our Daily Report.Small traders become aggressiveThe smallest of options traders have become remarkably aggressive in betting on a market rally.Their volume of opening call purchases is nearing record highs, last seen in 2000 and 2007. They are spending more than ...

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Options Traders Go All In As Investors Flood Into TIPS

This is an abridged version of our Daily Report.Options traders go all inOptions traders have rushed into bullish strategies at the expense of more conservative ones. Total call volume last week mushroomed to 32 million contracts, the highest since late January, while put volume was about ...

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Failed Bounce And Put Purchases

This is an abridged version of our Daily Report.Failed bounceBefore some modest after buying interest, the most important index in the world triggered a failed bounce.That’s one of the most feared patterns for bulls because it shows a complete lack of buying interest. The S&P did suffer ...

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Gold Miners Lag As Investment Managers Sell

This is an abridged version of our Daily Report.Miners’ minor monthsGold mining stocks have underperformed gold prices by more than 10% over the past couple of months.Due to their higher volatility, this is considered a negative for gold prices going forward. There is some modest truth to this, ...

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Unfolding Momentum

This is an abridged version of our Daily Report.CrashMonday’s trading – and post-close moves – are the types of action only seen a few times in history. Large, swift declines from a high have tended to lead to capitulatory moves that lead to rebounds in the medium-term. The possible liquidation ...

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Cornucopia Of Extremes

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Buying Climaxes As Small Traders Buy But Futures Gap Down

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Options Traders Pour Into Calls As Breadth Lags

This is an abridged version of our Daily Report.Forget stock, call options have more oomphRetail traders have returned in a big way. We saw on Friday the surge in brokerage transactions, and that has bled over into the options market. The smallest of options traders put on a skyrocketing number ...

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Global Momentum Spurs Melt Up Chatter

This is an abridged version of our Daily Report.Global synchronized momentumMost major stock markets are not only rallying, they’re showing extreme momentum. The weekly Relative Strength Index across 6 major global indexes is now the highest in history.High readings in that indicator suggest ...

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Options Worries As Energy Breadth Surges

This is an abridged version of our Daily Report.Trouble signs from the options marketTraders in VIX options appear to be betting on a spike, and they’re usually right. The few other times the options market was set up like this, volatility spiked.Meanwhile, traders in SPY options have been busy ...

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Housing Optimism Helps Gap And Go Attempt

This is an abridged version of our Daily Report.Housing optimismConfidence among those in the housing industry has jumped to one of the highest levels in 30 years. Similarly high levels led to poor returns in home building stocks, but good returns in suppliers like Home Depot and Lowe’s.Over the ...

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Bullish Mom And Pop And Options Traders

This is an abridged version of our Daily Report. Shades of 2000 for mom and popIndividual investors haven’t had this small of a cash cushion since 2000. In November, their cash holdings dropped below the prior recent lows in 2015 and August of this year.At the same time, they are heavily ...

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Misleading Buy Signal In Options

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