Posts Tagged ‘Stock Trading’

We love giving customers the features and functionality they want.

And today is one of those days. We have made some changes to our Watchlist feature that will allow you to interact with your Watchlists and other “list” components (Sector Monitor, Index Monitor, and Hotlist) in a different, more efficient, streamlined way.

From now on, you can trade directly from the Watchlist. Whether you’re trying to simply buy or sell stock or generate an advanced order, you can do so by simply clicking on the symbol in the Watchlist:

Not only that, you can send a quote for that symbol to the universal quote line at the top of the platform. If any components are linked to that top line (such as the option chain), then you’ll see an option chain load up for that symbol.

With these new changes, these components will have a cleaner feel that should make them easier to use.

But wait—there’s more!

We’re also bringing a new level of customization to the platform to the following components:

-          Positions

-          Orders

-          Watchlist

-          Hotlist

-          Index Monitor

-          Sector Monitor

We’re enabling a new feature that will make these components completely customizable. The new functionality includes:

-          The ability to pick from a variety of columns to display the data you want

-          Drag and drop columns where you want them

These features allow you to set up each component to show the exact data you want to see in the order you want to see it.

All you have to do is hover over the column headers and select the columns you want to see:

So if you want to see the high and low for a stock in your Watchlist, you can do that. Maybe you’d like to show the days to expiration of a position in your positions pane? You can do that too.

It’s all about exposing the information you want and hiding the rest.

Take a look at the new features, play around with them, and let us know what you think. Oh, and if you want to go back to the default column setting, you can always click on “Restore Defaults” and everything will go back to normal.

 

About 18 months ago – On October 20, 2009, to be specific – I posed the question, “Is it Time to Re-Weight the Nasdaq 100?”* At that time, Apple (NASDAQ:AAPL) shares had a 15.6% weighting in the 100-stock index (and by default, the Nasdaq-100 Trust).

At the time, I noted:

“…the relative outperformance of Apple (AAPL) shares in the past six years has created a situation that may be a call to action by the owner of the index, Standard & Poor’s, to re-weight Apple shares in the index as Apple has now become the 1000-pound gorilla … S&P may see the need to reduce the Apple weighting in the NDX and the related exchange traded fund … to equalize the components. If this happens, indexers will be forced to lighten the number of shares they hold in Apple stock. So in essence, Apple could theoretically be penalized for its own success.

In the ensuing 18 months – as Apple’s stock price rose from $200 to around $340 – its weighting in the index grew as well, moving to 20.5%. While the iPhone parent’s market cap has swelled to twice that of Google (NASDAQ:GOOG), its weighing in the NDX is now five times as great. (more…)

ETFs and Stocks When the Chicago Board Options Exchange (CBOE) initiated options trading in 1973, options were available on exactly 16 stocks.  These days, there are more than 3,000 stocks, indexes, and exchange-traded funds (ETFs) with available options.  Option traders surveying the options-investing landscape enjoy increasing variety and diversity.

They are taking advantage of this diversity as well.  In 2010, volume for cleared contracts at the Options Clearing Corporation rose to a new record high of 3.9 billion, 8% above 2009 volume.

There are currently more than 350 optionable exchange-traded funds (ETFs) and HOLDRs. Option traders can now pinpoint specific market sectors on which to place directional trades or created hedged positions.  And for those wanting a leveraged investment on the broader market, there are options available on indexes representing the Dow Jones Industrial Average, the S&P 500 Index, the Russell 2000 Index, and others.

Let’s briefly review how a trader can think big or small when selecting his stock option picks. (more…)


There are times when customers who want to short stocks get frustrated when they are charged hard-to-borrow fees.  Their main criticisms take one of a few forms:  the rate seems to be exorbitant, the rate is not consistent, and there is no guarantee that any stock does not end up with hard-to-borrow fees.  Usually, this ends up with investors being frustrated with their brokers.  They may even feel taken advantage of.

Well, the issue at hand is that the market for borrowing stocks can be a moving target.  The operative word here is “market,” and markets cannot be controlled by brokerages or clearing firms.  When there is a large demand to short a stock in relation to the number of shares outstanding, the firms who are actually long the stock get to charge higher and higher rates to loan it out.

To take a step back, someone is only allowed to short a stock (to sell it without being long it already) if they can borrow it from someone who is actually long it.  Assuring they can borrow the required shares is called “getting locate” from their stock loan desk. (more…)

Option GeeksWhen you think of stocks, you probably think of buy, sell, or hold when it comes to your investing choices.

When you take a position in a stock, it must move in your desired direction for you to be profitable.

Depending on your opinion toward a particular company, you are really limited as a stock trader to more of a full “on or off” sort of sentiment. Of course, you can choose to only allocate a certain percentage of your account to the trade (to manage your risk) or you can even diversify your portfolio to mitigate volatility and/or create a partial hedge in your account.

Here’s a diversification example:

The fact of the matter is that if you were to have bought ETFs in five different S&P 500 sectors in late April (April 28, to be specific), you would most likely have net losses in every one of your positions.   Below you will see the price changes from April 28 through June 29, 2010 in these popular sector ETFs:

Diversification Example

If you had allocated 20% of your account evenly into these 5 sectors, you would have a net loss of 13.2% over that time period.  Individual stocks may have done better or worse, but ETFs may also in and of themselves offer another level of risk reduction through diversity. (more…)

Economic News Could Mean More Bumps in the Road So if yesterday’s ADP report didn’t take the jam out of your doughnut, tomorrow’s job report just may. I wrote last month about the relationship between the two and also addressed the importance of job growth.  The market is much like a large, very stretchy rubber band attached to the unemployment rate, as it is a lagging indicator.  The market can certainly rise for a while without jobs following in lock-step.  But if the market begins to move higher and the unemployment rate remains high or climbs higher, there has historically been a downward force applied to equity prices.  This is partially the situation now, with other factors like Europe, China, consumer confidence, and more indicators preventing a sustainable rise in the marketplace.

The stock market is the uber leading indicator of economic growth (or the perception thereof) for many investors and economists (there are several others, such as building permits and the money supply). When the equity market begins its march higher, market participants look to coincident indicators like personal spending, consumer confidence, GDP, retail sales, etc. and earnings for confirmation, justification, and acceptance of the higher stock prices.  Finally, economists and investors want to see the lagging indicators such as the unemployment rate, and consumer price index come in line with other indicators, in addition to performing based on historical observations. Generally by this time, according to Econ 101, the economy may be well on its way to recovering. (more…)

The S&P 500 Index has been chugging along to the upside since hitting its most recent low of 1,042 on June 8. At the time, that low was exactly at the lower two-standard-deviation Bollinger band, possibly indicative of an oversold condition.  As of Tuesday’s close, we were trading in the middle of these bands.

Since the June 8 low, the broad market ETFs such as the SPY and the DIA have been moving higher on lower and lower volume, which could mean a lack of conviction on the part of market participants.  That weakness is maybe beginning to rear its ugly head in the past two days’ price action.

When the SPX began moving lower back on April 26, the price of the index shifted lower during the last 30 minutes of the trading day, accelerating the moves south from early in the day and confirming direction.  From June 8 until Monday, the prominent market action was to move higher in the last 30 minutes of the day, leading the market to a net gain in that period.  But that trend may be changing yet again and the reluctance of traders to hold positions overnight could be one cause of this.

I remember as a market maker and specialist, one of the main ways (and really the only one way) I had for analyzing short-term market direction was to “read the tape” and watch order flow. In other words, I would look at price action and make determinations as to whether to be long or short delta (direction) at different moments during the day and overnight.  While this is not foolproof, it really makes sense when you think about it in the most basic of terms. (more…)

Planning for the Week Ahead

Monday, June 21st, 2010

Desk CalendarAny successful trader or business man (woman), knows that planning ahead and preparing for upcoming events and potential threats to your investments is key to preventing catastrophe.  The first thing every investor needs to do is to maintain a general awareness of upcoming events that are already announced.  In a world full of uncertainty, at least we get to know a little bit about the future. First off, major economic data coming up this week includes:

  • Existing home sales Tuesday (Expectations for 6.23 million)
  • New Home Sales, FOMC statement and rate decision Wednesday (Expectations for 435k homes and minimal verbiage change from the FED with no move in interest rates, respectively.)
  • Core Durable Goods and Unemployment claims out Thursday (Expectations for a 1.1% rise in durable goods orders and 461,000 in weekly initial unemployment claims.)
  • Friday brings the final reading on quarterly GDP as well as the University of Michigan’s consumer sentiments revisions. Both numbers are expected to be unrevised from their last readings.

As I mentioned early last week, earnings season is upon us, but will not be coming full force until the second week of July. I also mentioned early Friday that expiration Friday (quadruple witching) has really been a non-event as of late. This was confirmed by the modest bullish moves we saw on Friday. (more…)

From Trading Stocks to Trading Options

Thursday, June 17th, 2010

Balancing actAs everyone knows, most investors continue to use stocks (as opposed to options) for their primary investment tool.  Although options volume continues to grow each year, there are still a lot of people who do not understand what all the fuss is about.  Well hopefully, I can give you a quick rundown of the reasons investors should be versed in both stock and options strategies.  By “versed,” I mean educated in how options work and the potential benefits (and risks) they provide when used correctly.  I do not mean, “just try and figure it out by making real trades without knowing what you are doing.”

In order to move along, I will skip the super-basics:  What is a call? What is a put?  What is expiration? etc.  If you need to brush up on these mechanics go to The Options Industry Council. Here the option novice will find the information needed to understand this blog.

How Options Compare to Stocks:

1. The potential for increased return on investment by risking less capital.

Prices in examples given are as of Monday, June 14.

If you expect a stock to move within a defined time frame, you can buy in-the-money (ITM) options that would express this view but require less capital than buying the stock on margin.  For example, if you think that Citigroup (NYSE:C) is going to be trading as high as $5 by the middle of September, you have two choices: (more…)

Here Come the Earnings…

Wednesday, June 16th, 2010

earningsIt’s the broken record that we traders love to play again and again.  While the process is the same, the outcome is almost always different.  Earnings season is often a catalyst for change in a stock’s direction, volatility, and even sentiment.   It can also simply accelerate a trajectory or cause a stock to do nothing at all, but regardless, just about every investor needs to be hyper-aware of earnings dates, especially the ones that involve your stocks or their peers.

Alcoa (NYSE:AA) is the supposed grand marshal of this quarterly parade, but even though there are some stocks that will report sooner, the aluminum giant’s reporting date should be noted, as the weeks following Alcoa’s report is when the bulk of S&P 500 companies report.

Sectors and their leading stocks tend to report in clumps within a short time frame of one to three days. So if you know a large retailer is reporting, chances are that a comparable peer’s report is not far away.  Peers can obviously have an effect on each other’s stock price and more often than not, a negative report by one stock in a sector will have a negative effect on the others and vice-versa. Some traders call this phenomenon “falling in sympathy.” (more…)

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