When updating the chart below, where the price and normalized volume of SPY from 2003/2004 intertwines with the SPY of 2009/2010, I noticed one area of consistent difference between the two time spans—volatility. Using the VIX index as a proxy for actual volatility, the ’09 / ’10 values have averaged about 40% higher than the ’03 / ’04 bull market. On the slight …
There is a lot of premium available on SPY options that will expire at the end of next week due to the recent market gyrations. I created a covered call, buying SPY at 117.26, selling-to-open May 117 calls at 1.69 for a net investment of 115.57. The Theta (time decay) on these options is $8 per day.
It’s 12:41AM Eastern time, 10-May-2010 and the Asian markets are up—evidently they are liking the central banks moves to shore up the Euro. I think Greece’s days in the Euro camp are numbered—maybe 6 to 18 months. The UK has shown that it is perfectly OK to be a member of the EU without being on the Euro, and I believe Germany and France …
One alternative to a covered call is a bull spread. You give up some premium in exchange for significantly reducing your downside risk. I bought SPY 118 May calls at 3.91 and sold 121 May calls at 1.82 for a net debit of 2.09. SPY was right at 121 at the time, so the the 121 calls were right at the money–which is the maximum …
The S&P 500 has already reached levels this year that weren’t reached until December 2004 in the tech stock crash recovery. The volume levels are underwhelming, but on almost every other front the bulls are celebrating. It doesn’t hurt that business continue to report very good numbers. It is hard to get a good doom and gloom mood going with folks like Intel …
