Daily Speculations

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Right Either Way

(excerpt from article by Paul Cherney, 2/24/4)
 
Ripe for a Rebound
"S&P 500 momentum measures are at levels which often precede a bounce in prices -- so a rebound could happen any day. Right now, on a short-term basis, there is a balance between buyers and sellers and prices can move in either direction. I think this is the trading range I have anticipated for a couple of weeks; I am just not sure as to whether or not we have seen the lower edge of the trading range."

Comment from J.N. (2/27/4 12:23 PM): Something to buttress a point you made in your article in Active Trader. The CBOE covered call index has returned about 1% more per year than the S&P 500 total return index over the past sixteen and a half years.  If you take out bid-ask spreads and commissions the number probably reaches zero.  While you would point out the futility of a bearish strategy (selling calls), the fact is that volatility estimates were spot on. Nobody except the floor traders made money over the long term.