August 15, 2013 6:31 PM | 4 min read |
27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
The major market averages recorded large losses on Thursday as expectations that the Federal Reserve will begin trimming its quantitative easing program as soon as the September FOMC meeting rose in the wake of positive economic data. In a bizarre twist - which is emblematic of the central bank's outsized influence on the market in the current environment - a strong jobs report along with a rise in CPI weighed on investor sentiment and triggered cascading equity prices. The economic data showed that the jobs market continues to heal and that deflation concerns are receding. Given the improving conditions, it is becoming more likely that the Federal Reserve with begin tapering its bond-buying program in the near-term, which is causing anxiety on Wall Street. Since the financial crisis, the central bank has been adding liquidity to the markets on a near-constant basis and it is unclear how the economy will perform in the absence of this stimulus.
Major AveragesThe Dow Jones Industrial Average lost more than 225 points, or 1.47 percent, to close at 15,112. The S&P 500 fell 24 points, or 1.43 percent, to 1,661. The Nasdaq shed 63 points, or 1.72 percent, to 3,606 on Thursday.
Jobless Claims Initial jobless claims fell to 320,000 for the week ending August 10 compared to 335,000 for the week ending August 3. This was the lowest initial claims reading since October 2007 and came in better than the consensus estimate calling for job losses of 339,000 for the period. Continuing claims declined to 2.969 million for the week ending August 3 versus 3.023 million for the week ending July 27. This compared to the consensus estimate of 3.000 million continuing jobless claims.
CPIConsumer prices rose 0.2 percent in July versus a gain of 0.5 percent in June. This was in-line with consensus expectations. Core CPI, which excludes volatile food and energy prices, also gained 0.2 percent for the third month in a row. This was also in-line with the consensus estimate.
Industrial Production and Capacity UtilizationIndustrial production was flat for the month of July after rising 0.2 percent in June. The consensus expected a 0.4 percent increase in industrial production for the month. Capacity utilization declined 0.1 percent in July to 77.6 percent. This was below the consensus estimate which expected capacity utilization to rise to 78.0 percent for the month.
Philadelphia Fed The Philadelphia Fed's Business Outlook dropped to 9.3 in August compared to a reading of 19.8 in July. This was a slightly larger decline than the consensus estimate, which called for a fall to 10.0.
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Despite a deep pullback for stocks on Thursday, crude oil prices rose. Late in the day, NYMEX crude futures were up 0.33 percent to $107.20 and Brent contracts had risen 0.83 percent to $111.11. Natural gas registered a gain of 2.57 percent to $3.43 on the session. Precious metals rose sharply on Thursday. COMEX gold futures climbed 2.39 percent to $1,365.30. Silver contracts added 5.45 percent to $22.98. Copper traded up 0.80 percent on the day to $3.3625. The entire grains complex rose on the trading session. Corn futures jumped a little less than 4 percent while wheat added slightly more than 1 percent. Movers in soft commodities included a 0.69 percent decline in orange juice concentrate contracts and a better than 1 percent gain for ethanol.
Bonds Long-term Treasury prices fell on the day as investors fear that the Federal Reserve is going to cut the pace of its bond-buying at the September FOMC meeting. The iShares Barclays 20+ Year Treasury Bond ETF (NYSE: TLT) fell 1.35 percent to $103.73. Yields rose as prices declined on the day. Treasury yields were as follows late on Thursday: The 2-Year Note yield was 0.35 percent. The 5-Year Note was last yielding 1.52 percent. The 10-Year Note and 30-Year Bond were yielding 2.77 percent and 3.81 percent, respectively.
Related: Hedge funds file 13F reports; Click to see where Wall Street's top investors are putting their money!CurrenciesThe U.S. Dollar recorded a relatively large loss on the session. The PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP), which tracks the performance of the greenback versus a basket of foreign currencies, lost 0.68 percent to close at $21.94.The closely watched EUR/USD pair climbed 0.66 percent to $1.3347. Other movers included the USD/JPY and the GBP/USD. The greenback fell 0.76 percent against the Yen and the British Pound rose 0.87 percent against the Dollar on Thursday.
Volatility and VolumeThe CBOE Volatility Index (VIX) surged on the session as stock prices plummeted. The widely watched barometer of volatility expectations closed up 13 percent at 14.73. Volume spiked along with volatility. It was the first day in weeks where share volume exceeded the 3-month average. Around 152.7 million SPDR S&P 500 ETF (NYSE: SPY) shares traded hands compared to a 3-month average of 132 million.
Stock Movers Surging precious metals prices helped miners on the day.
27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
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