Our BlogOur current view on the market
Volatility is once again showing a familiar pattern: spiking quickly then fading just the same. Last week, after essentially trading in a tight range, markets broke to the downside on Wednesday. You probably remember the S&P 500, Dow Jones, Nasdaq, and Russell 2000 all off somewhere between 1.5% and 2.5%. The follow through to the downside didn’t materialize. The entry for this trade once again was a very small window.read more
Last week some US equity funds experienced large redemptions that corresponded with the down day in the markets. If you remember, the major indices were off between -1.5% and- 2.5%. Some commentators mentioned that it was the largest outflows since right before the election. Curious, I went back through the archives and found the corresponding chart and article on Bloomberg highlighting the massive outflows from emerging market ETFs around the election period.read more
After a seemingly endless amount of news stories and CNBC prognosticators opining about how low volatility has been, today was a surprise to some. Volatility spiked and the major averages were off 1.5% to 2.5% across the board as of late trading. Long time advisors utilizing our HIPOS (High Probability Options Strategy) know that since we are net sellers of option premium, we often wait for short term spikes to capitalize on. While we don’t try and time the market, the result of being patient often leads to entries after sell offs.read more
Here we are at the start of the 2nd week of May and earnings season is beginning to wind down. Around 3/4ths of companies have reported their Q1 earnings so we are definitely seeing fewer firms report. It has been a solid earnings season for the S&P 500 as more companies have reported stronger than expected earnings results. The markets have remained stable through the majority of the reporting season.read more
With 9 days left until expiration day, the market currently sits 13% above the short put strike and well above our purple exit curve pictured above. With the close last Friday, the S&P 500 Index (our underlying) was within striking distance of its 2400 high. With our High Probability Options Strategy, your clients root for the underlying index to remain as far away from the purple exit curve and short strike as possible.read more
As a golfer, one of my favorite movies of all time is Caddy Shack. It is a classic. And there is a great quote in that movie:
Judge Smails: Ty, what did you shoot today?
Ty Webb: Oh, Judge, I don’t keep score.
Judge Smails: Then how do you measure yourself with other golfers?
Ty Webb: By height.
When you’ve been writing and talking as much about the need for portfolios to use alternatives and hedging as much as we have, seeing an increase in stories pointing to the same thing are encouraging. Yet as the title inspired by Star War’s Obi Wan Kenobi asks, are the alternatives being considered the right ones? Do they reduce rather than increase risk to a portfolio?read more
ZEGA’s Buffered Index Growth product (ZBIG) has been active since mid-2016 and it has been our fastest growing hedged equity substitute product. On its current growth trajectory, we would expect it to surpass Buy & Hedge Classic with its Assets under management (AUM) sometime this quarter – though many factors could impact that like market performance, for one.read more
As of mid-day Thursday April 20th, the market remains a good 12% away from our short 2075 put leg. With 22 days left until expiration, time decay has benefited the trade. At the same time, the further into the trade we get, the more distance between the current underlying S&P 500 Index price and our purple defensive exit curve pictured above.read more
Click Here for a PDF version of our March performance numbers.read more