In this trade, the put options act as short-term insurance for the long stock position.
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Short dollar positions turn into long stock trades, which win big when the broad market rallies.
Investors may be selling the calls outright, or writing the contracts against long stock positions.
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Once again, it would appear that options traders are offsetting long stock positions by purchasing index puts.
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These contracts were likely purchased in order to protect a long stock position.
The reshuffling, however, seemed to reassure investors, halting a long stock slide: Since last summer, when the year-long earnings-probe began, shares have rebounded 24.45%.
This ratio tends to move higher when fund managers are in equity accumulation mode, as they purchase puts on these broad-based ETFs to hedge their long stock positions.
The investor responsible for the transaction may be taking an outright bearish stance on the stock, or may be using the position to hedge long stock in DNKN through earnings.
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The combination of long stock and debit put spread positions the trader to make money on the upside if shares in Cree continue to rally, while also providing downside protection in the event of a pullback through February expiration.
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If you look at the table below based on data from Eakle's decades-long Stock Market Diary, you will see that Monday probably represented a dramatic purge and capitulation such as we haven't seen since 1987 or 1990, when the percentage of stocks above their 200-day moving averages also fell to single digits.
While the calls do not appear to be tied to any simultaneous transaction in the underlying stock, it is possible the investor is already long the stock and selling covered calls.
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You can also use YCharts Stock Screener to find companies with a strong ROE and then chart that metric to see how long the stock has been a strong ROE-er.
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Long only stock market operators found nowhere to hide either in domestic markets or abroad.
From that point on the risk is no different on the downside from being long naked stock.
Finally, traders snapping up July expiry put options this morning may be long the stock and protecting their gains.
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We believe there are simply too many incremental revenue opportunities to risk not being long the stock before they are leaked or announced.
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Later in the week, I will discuss the ins and outs of selecting a strike when you sell a put in an attempt to get long a stock.
"What you saw today was a marketplace that felt pretty certain the bankers were long more stock than they wanted, " Michael Shea, managing partner at Direct Access Partners, a financial-services firm, said Monday.
When any or all of the employer stock is sold, Bill will pay long-term capital gain rates, currently only 15%, on the NUA attributable to that stock, regardless of how long (or short) the stock was held after it was distributed from the plan.
Remember, from the middle 1980s to the early 1990s, many companies replaced restricted-stock and long-term performance bonus plans with stock options in the belief that they were a better way to link shareholder and executive interests.
And the President has long advocated that in lieu of cash, any bonus that is given ought to be given in long-term stock that does not, again, reward short-term risk taking, but rewards long-term success.
But, again, like Bank of America these represent only half of the long-term stock award.
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The Alternative Strategies Fund focuses on a stock hedging asset class, or a stock long-short.
Many investors bring a mindset typical of our tap-the-touchscreen-and-it-appears society into their long-term stock positions.
Click here for more investment analysis with long and short stock recommendations from Joseph Parnes in Shortex.
That, in turn, would likely raise interest rates in America, wreaking havoc on a long-pricey stock market.
But as long as the stock market stays up, complaints from the shareholders are going to be pretty feeble.
He holds the stock long and has complimented it publicly for some time.
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So we have stock long-short, commodity long-short, managed futures, currency long-short, real estate hedge, and a global bond hedge.
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