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How to Help Your Clients Invest Comfortably with Markets at All-Time High

In talking to advisors recently, many have relayed client concerns about the markets – which is keeping money on the sidelines. Many just think they have missed the big up move with the markets near all time highs. You have to be invested to grow with the markets. The statistics show that missing out on the 5 or 10 best days of the year will harm your long term returns. Often fear prevents individuals from investing. Instead, they might try to time the market or wait for a pullback. Sometimes that never happens and they miss out on a nice bull run higher. Or they decide to sell and go to cash – only to have to buy back in later at a higher price.

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HIPOS Weekly Update: Wire to Wire Winner

Last week saw our primary HIPOS trade expire worthless – which is our targeted outcome! This generated the full profit for the clients in the strategy. Since we are short the spread, we take in premium then want it to erode to worthless. To get this entry in early January, we capitalized on a small window of opportunity to enter when volatility spiked. Shortly afterwards, the market moved higher and sideways. Thus, never threatening our defensive exit zone.

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HIPOS Weekly Update: Running Out the Clock

This week the primary HIPOS trade is set to expire. While the market gapped down this morning with a small volatility increase, the market remains safely above the purple defensive exit curve. Your clients shouldn’t expect much change in the value of the positions unless the S&P 500 Index were to dramatically move lower. As of the open this morning, the index remained over 16% above our short strikes.

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HiPOS Weekly Update: Slow and Steady

                                After entering our primary HIPOS trade earlier this month, the market moved higher and has remained in a sideways pattern since. Sideways works just fine...

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HIPOS Weekly Update: A Brief Volatility Window for Entry

After a brief end of year pullback in the S&P 500 the index has resumed its rally starting 2017. As we’ve been writing about, typically we need a volatility spike to enter a new position that meets all our criteria. That window opened for a brief time in the New Year which allowed us to establish our primary HIPOS position. Since entry, the market has moved higher and volatility has dropped. This is a positive for your clients currently in the trade. And we are now a week into our trade and thus a week closer to expiration day. This is helpful since as the graph above displays, the position has maintained its distance between the S&P 500’s current price and the defensive exit curve but we have less time until expiration. At midmorning in Monday’s session, the index is roughly 16% away from our short strike price.

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HIPOS Weekly Update: Ringing in 2017 with a New Trade

The market action Friday and todays retreat from the highs allowed us to capitalize on the available volatility premium. For this trade, we used S&P 500 Index options with a short 1990 strike price in our spread position. With the position expiring February 3rd, this means there are 33 days until expiration. As we benefit from time decay as each day passes, the Martin Luther King market holiday provides an extra day with no trading. Weekends and holidays benefit our positions as time premium erodes for your clients positions even when the market isn’t open.

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