VanEck ETF Trust VanEck Intermediate Muni ETF (BATS: ITM)

VanEck ETF Trust VanEck Intermediate Muni ETF (BATS:ITM), Trade Ideas

VanEck ETF Trust VanEck Intermediate Muni ETF

News

Bonds

Specialty ETFs

New ETFs

Markets

ETFs

Market Vectors High Yield Municipal Index ETF

Market Vectors Intermediate Municipal Index

SHYD

There Are A Lot Of Muni Bonds In This New ETF

Long Ideas

Pre-Market Outlook

Intraday Update

Trading Ideas

VanEck Bolsters Muni ETF Lineup With 2 Additions

CNBC

Emerging Markets

Emerging Market ETFs

Politics

Events

Global

Econ #s

Media

General

HYMB

Market Vectors Pre-Refunded Municipal Index ETF

PowerShares Insured California Municipal Bond Portfolio

PowerShares Insured Municipal Bond Portfolio

PowerShares Insured New York Municipal Bond Portfolio

Puerto Rico&#39;s Debt Crisis: How It Happened And Why A $1 Billion Default Is Coming Friday

ITmedia Inc

Itoco Inc

ITECH MINERALS LTD by ITECH MINERALS LTD.

iTech Minerals Ltd

ITM Power PLC

INTERMAP TECHS CORP A by Intermap Technologies Corp.

Intermap Technologies Corp

INTERTAINMENT MEDIA INC by Intertainment Media, Inc.

Intertainment Media Inc

REACT GAMING GROUP INC by REACT GAMING GROUP INC.

React Gaming Group Inc

Some <a href="https://www.benzinga.com/money/best-municipal-bonds/">municipal bond</a> exchange traded funds hold a lot of those bonds, but many of those funds focus on certain types of municipal debt or specific durations and maturities.
A new ETF offers investors a unique approach to increasing the depth and diversity of their municipal bond exposure.
<h3>What Happened</h3>
On Thursday, VanEck introduced the VanEck Vectors Municipal Allocation ETF (CBOE: MAAX). That new ETF is the seventh municipal bond ETF in the VanEck stable.
MAAX &ldquo;seeks maximum long-term after-tax return consisting of capital appreciation and income generally exempt from federal income tax. In pursuing long-term total return, the Fund seek to reduce duration and/or credit risk during appropriate times by allocating primarily to VanEck Vectors municipal exchange-traded products that invest in tax-exempt bonds,&rdquo; <a href="https://www.vaneck.com/etf/income/maax/overview">according to VanEck</a>.
Translation: the new MAAX is an ETF of ETFs and its holdings are other VanEck municipal bond funds.
<h3>Why It&#39;s Important</h3>
MAAX debuted with four holdings, meaning two of the firm&#39;s established municipal bond ETFs were not included in MAAX&#39;s initial lineup.
The new ETF&#39;s four holdings are the VanEck Vectors&nbsp;High-Yield Municipal Index ETF (CBOE: HYD),&nbsp;VanEck Vectors &nbsp;AMT-Free Long Municipal Index ETF (CBOE: MLN), VanEck Vectors&nbsp;AMT-Free Intermediate Municipal Index ETF (CBOE: ITM) and the VanEck Vectors Short High-Yield Municipal Index ETF (CBOE: SHYD).
Combined, those four ETFs are home to 5,860 bonds, giving MAAX when the deepest, most diverse rosters among all municipal bond ETFs. Those four funds have over $4.7 billion in combined assets under management.
MAAX has an effective duration of 7.32 years and an average years to maturity of 18.41, <a href="https://www.vaneck.com/etf/income/maax/overview">according to issuer data</a>.
<h3>What&#39;s Next</h3>
&ldquo;MAAX is designed around a proprietary model that uses momentum, along with both duration and credit risk indicators, to tactically allocate among selected <a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fwww.vaneck.com%2Fmunis%3Fcountry%3Dus%26utm_source%3Dveg%26utm_medium%3Dpress-release&amp;esheet=51986020&amp;newsitemid=20190516005605&amp;lan=en-US&amp;anchor=VanEck+Vectors®+Municipal+Bond+ETFs&amp;index=4&amp;md5=0d0ac9522591f3a8b04e50ec02c969ab" target="_blank">VanEck Vectors Municipal Bond ETFs</a>,&rdquo; according to the issuer.
The new MAAX carries an annual fee of 0.36 percent, or $36 on a $10,000 investment.
Related Links:
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/19/05/13751714/how-you-can-ratchet-down-risk-with-these-popular-etfs">Play It Safe With These Popular ETFs</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/19/05/13751739/a-new-etf-to-refresh-the-value-factor">A Better Way To Play Value</a>

Stock Split

Market Vectors Emerging Markets Local Currency Bond ETF

EMLC

VanEck Reports 1-For-2 Reverse Split For VanEck Vectors J.P Morgan EM Local Currency Bond ETF (EMLC), VanEck Vectors AMT-Free Intermediate Municipal Index ETF (ITM), VanEck Vectors High-Yield Municipal Index ETF (HYD)

VanEck, which is already a significant player when it comes to municipal bond exchange-traded funds, added to its municipal ETF lineup Tuesday with the addition of two funds.
The VanEck Vectors AMT-Free 12-17 Year Municipal Index ETF (BATS: ITML) and the VanEck Vectors AMT-Free 6-8 Year Municipal Index ETF (BATS: ITMS) can be seen as more refined relatives to the popular Market Vectors-Inter. Muni. Index (ETF) (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>). ITM debuted nearly nine years ago and has $1.6 billion in assets under management.
<h3>ITML</h3>
ITML follows the Bloomberg Barclays AMT-Free 12&ndash;17 Year Intermediate Continuous Municipal Index (BVELTR), &ldquo;which is intended to track the overall performance of the U.S. dollar denominated intermediate term tax-exempt bond market with final maturities from 12&ndash;17 years,&rdquo; <a href="https://www.vaneck.com/vaneck-vectors/income-etfs/itml/snapshot/">according to VanEck</a>.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/09/8475280/a-surprise-among-utilities-etfs">A Surprise Among Utilities ETFs</a></bzrelatedlink>
That new ETF, which holds 36 municipal bonds, has an effective duration of almost 7.4 years and a yield to worst of nearly 2.1 percent. Municipals issued by California, Texas and New York combine for about 52 percent of ITML&#39;s weight.
<h3>ITMS</h3>
The VanEck Vectors AMT-Free 6&ndash;8 Year Municipal Index ETF tracks the Bloomberg Barclays AMT-Free 6&ndash;8 Year Intermediate Continuous Municipal Index (BVE6TR), &ldquo;which is intended to track the overall performance of the U.S. dollar denominated intermediate term tax-exempt bond market with final maturities from 6&ndash;8 years,&rdquo; <a href="https://www.vaneck.com/vaneck-vectors/income-etfs/itms/snapshot/">according to VanEck</a>.
ITMS, which holds 25 bonds, has an effective duration of just over six years and a yield to worst of about 1.5 percent. Municipals issued by New York, California and Pennsylvania combine for 43 percent of the new ETF&#39;s lineup.
Municipal ETFs have been popular destinations this year, as investors have continued hunting for a yield, a search that has stoked interest in longer duration fare as the Federal Reserve has consistently put off raising interest rates.
Both new VanEck ETFs charge 0.24 percent per year, or $24 on a $10,000 investment.

On July 1, 2016, Puerto Rico will default on more than $1 billion in general obligation bonds, the island&#39;s senior credits protected by a constitutional lien on revenues. -Puerto Rico Governor Alejandro Garc&iacute;a-Padilla.
On Wednesday, Garc&iacute;a-Padilla wrote an article for <a href="http://www.cnbc.com/2016/06/29/puerto-ricos-governor-warns-of-imminent-default-on-more-than-1-billion-in-debt-commentary.html">CNBC</a> explaining why the commonwealth he governs will default again on Friday. &ldquo;Puerto Rico does not have the ability to repay the $70 billion debt that was generated by past administrations and their creditors. The debt must be restructured fairly and equitably to both the people of Puerto Rico and the bondholders,&rdquo; the note explained.
<h3>How Puerto Rico Got In So Deep</h3>
Puerto Rico&rsquo;s financial crisis began years ago when its government started issuing debt seeking to cover its public spending deficit &mdash; a very common practice in emerging economies. The catch here was that the municipal bonds and other debt titles were tax-exempt (some say, triple tax-exempt) for U.S. investors and paid higher yields than most other munis. So, the bonds became very popular and easy to place.
However, as corporate tax breaks on the island expired in 2006, a lot of business fled, leaving a large portion of Puerto Rico&rsquo;s population jobless and its government dealing with more than it could handle. This led it to issue even more debt.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/news/16/06/8140107/puerto-rico-being-sued-by-hedge-funds-for-dodging-payments">Puerto Rico Being Sued By Hedge Funds For Dodging Payments</a></bzrelatedlink>
However, unlike other American cities and states, the island was not allowed to file for bankruptcy, and therefore, could not get a court order to restructure its debt. In addition, the commonwealth was not allowed to borrow from the IMF, as it was not a sovereign nation either.
To make a long story short, the island was in trouble, as it had spent even more than it had borrowed, and, thus, could not return the money, neither could it easily restructure its obligations.
<h3>What Now?</h3>
On Wednesday, Puerto Rico&rsquo;s governor said the island would go into default, yet again, stressing the need for a long-term restructuring plan that&rsquo;s fair and equitable &ldquo;to both the people of Puerto Rico and the bondholders.&rdquo; And, a restructuring could finally come&hellip;or so it seems.
Earlier on Wednesday, <a href="http://www.bloomberg.com/politics/articles/2016-06-29/puerto-rico-debt-bill-clears-biggest-remaining-hurdle-in-senate">Bloomberg</a> reported a bill that would allow the commonwealth to access some of the bankruptcy protections other U.S. states enjoy seemed close to passing &mdash; and could be approved as early as Thursday, as it had already passed the threshold it needed in the Senate. Moreover, the White House has stated that the president will sign the measure, if accepted by the Congress. Of course, a break would come with certain obligations, like spending cuts and external oversight.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/05/7914458/puerto-ricos-default-hurts-local-investors-the-most">Puerto Rico's Default Hurts Local Investors The Most</a></bzrelatedlink>
While Garc&iacute;a-Padilla expressed his discomfort with the oversight Congress wants to impose, arguing it would undermine the democratic Independence of the Commonwealth, he accepted it as the best choice available. Moreover, he said, whatever the Congress decides, Puerto Rico will still default on Friday.
&ldquo;The emergency measures we have taken are unsustainable, harm our economy, reduce revenues and diminish our capacity to repay our debts. Puerto Rico cannot endure any more austerity,&rdquo; he elaborated.
&ldquo;We are facing a government less capable of providing the services which the public needs,&rdquo; the governor added, making allusion to the cuts in education and healthcare that the so-called vulture funds (some hedge funds that own the debt and claim they &ldquo;should be paid before essential services&rdquo;) are asking for.
&ldquo;As governor, I will use my remaining time in office to benefit from the tools provided by PROMESA and develop a fiscal plan that is faithful to the best interests of the people of Puerto Rico,&rdquo; he concluded.
Check out Broadway star Lin-Manuel Miranda asking bondholders and the U.S. Government to help relieve Puerto Rico&rsquo;s situation&hellip;with a rap!

	&nbsp;

	<iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/0Evat-L7djc" width="560"></iframe>

	&nbsp;

	Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned above.

Puerto Rico's Debt Crisis: How It Happened And Why A $1 Billion Default Is Coming Friday

Some market observers might be apt to say there is plenty of supply in the municipal bond market, but some would contest that point, noting the lack of municipal bond supply has forced yields lower and the yield curve to flatten.
Those factors are not damping demand for exchange-traded funds such as the VanEck Vectors High-Yield Municipal Index ETF (Market Vectors ETF Trust (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>)) and the VanEck Vectors AMT-Free Intermediate Municipal Index ETF (Market Vectors-Inter. Muni. Index (ETF) (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>)). Investors have also put more modest amounts of new money to work YD&#39;s short duration cousin, the VanEck Vectors Short High-Yield Municipal Index ETF (Market Vectors ETF Trust (NYSE: <a class="ticker" href="/stock/shyd#NYSE">SHYD</a>)).
<h3>Supply And Demand</h3>
&ldquo;But why the lack of supply? Supply is commonly defined as new issuance to finance public purpose projects around the country. Issuance itself is subject to a number of factors, not least of which is predictable seasonality. Generally speaking, at the end of the second quarter issuance tends to intensify as municipalities approach their fiscal year ends, predominantly at the end of June.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/05/7992650/municipal-bond-etfs-rebuff-weak-oil-prices">Municipal Bond ETFs Rebuff Weak Oil Prices</a></bzrelatedlink>
&ldquo;In July and August, there is a natural lull as people take vacations and the market receives less attention. Finally, in the last quarter of the year, the pace of issuance generally picks up again as bankers seek to book deals before the year ends,&rdquo; <a href="http://www.vaneck.com/blogs/muni-nation/supply-dynamics-june-2016/">according to a recent VanEck note</a>.
<h3>The Role Of Interest Rates</h3>
Municipal ETFs have been popular destinations this year as investors have continued hunting for a yield, a search that has stoked interest in longer duration fare as the Federal Reserve has consistently put off raising interest rates.
With the interest rate environment still benign, income investors may want to consider an ETF like HYD, which has an effective duration of 8.3 years. HYD&#39;s performance has also been impressive when considering there were some concerns about the possible effects of low oil prices on municipal bonds issued by major oil-producing states. The ETF holds nearly 1,380 bonds, but its largest weight to a big oil state is 7.3 percent to Texas, but that is just the fund&#39;s fourth-largest state allocation.
&ldquo;Demand for munis, by contrast, has remained robust. We entered 2016 coming off the back of two strong years in 2014 and 2015, and investors comfortable with, if not reliant upon, steady income from the muni space. And in the face of persistent uncertainty in both the domestic U.S. and international markets, munis have continued to provide investors with low correlation to other asset classes, and strong credit quality, in addition to positive performance for the past three years according to the Barclays muni bond indices,&rdquo; added VanEck.
HYD has added over $265 million in new money year-to-date while investors have poured $109.5 million into ITM.

Amid Dearth Of Supply, Enthusiasm For Muni ETFs Remains

Options overview this week is pretty much the same as the previously mentioned video. 
We're still in melt-up status with many of these single names. S&amp;P 500 (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) has been hitting all time highs pretty much every day, causing a bit of heartache for the shorts. Any short opportunity is short lived, recommendations are to short via 'In The Money' (ITM) weekly options for scalps. 
Otherwise, long calls have been working just fine.
Something interesting to note is that, although we've been sitting at record low volatility as the SPY keeps going up, volatility is actually rising during the day. 
This makes it relatively a pain to short 'Out Of The Money' (OTM) options during the week. Idea here is to be more focused on expiry writing, instead of vol writing. This action continues to be great for dip buyers and breakout players on vanilla long calls.
<iframe width="640" height="360" src="https://www.youtube.com/embed/KwrcKsC34C4" frameborder="0" allowfullscreen></iframe>

Options

Economics

Movers

Benzinga Weekly Options Outlook for the Week of May 20

Van Eck's Market Vectors unit, the fifth-largest U.S. ETF sponsor, announced that just five of its 50 ETFs will make long-term capital gains distributions to investors this year. 

Distributions are paid to investors from the capital gains of the firm's investment portfolio. For example, when a mutual fund manager turns a profit on a trade and closes the position, the fund's shareholders, not the sponsor, are saddled with the tax liability.
Most ETFs do not distribute capital gains to investors, which makes the asset class typically more tax efficient than mutual funds.

Four of the Market Vectors funds making long-term capital gains distributions will do so to the tune of less than a penny per share. Those funds are the Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>), the Market Vectors Intermediate Municipal Index ETF (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>), the Market Vectors Short Municipal Index ETF (NYSE: <a class="ticker" href="/stock/smb#NYSE">SMB</a>) and the Market Vectors Mortgage REIT ETF (NYSE: <a class="ticker" href="/stock/mort#NYSE">MORT</a>). 

The Market Vectors LatAm Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/bono#NYSE">BONO</a>) will make a distribution of 2.8 cents per share, <a href="http://vaneck.com/Home.aspx">according to a statement on Van Eck's Web site</a>. The firm said the estimates were made on October 31 and are subject to change.

The Market Vectors Biotech ETF (NYSE: <a class="ticker" href="/stock/bbh#NYSE">BBH</a>) and the Market Vectors Oil Services ETF (NYSE: <a class="ticker" href="/stock/oih#NYSE">OIH</a>) will make short-term capital gains distribution this year.

Last week, BlackRock's iShares unit, the world's largest ETF sponsor, said said 275 of its 280 ETFs, or 98 percent of its lineup, <a href="http://www.benzinga.com/markets/bonds/12/11/3095644/most-ishares-etfs-wont-have-2012-capital-gains-distributions#ixzz2CggU2UGx">will not pay capital gains distributions to investors this year</a>.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Sector ETFs

Broad U.S. Equity ETFs

Currency ETFs

BONO

MORT

XMPT

Most Market Vectors ETFs Dodge Long-Term 2012 Cap Gains

Despite precarious financial positions for several large U.S. states and an increased number of municipal bankruptcies, ETFs tracking municipal bonds have been stellar performers in 2012. Jim Colby, portfolio manager and senior municipal strategist, responsible for Market Vectors municipal bond investments, expects the ebullience to continue.

"I believe the continued value proposition embedded in municipal yields — nominally higher than those of treasuries — has attracted both individual and institutional buyers," Colby said in his weekly research note on muni bonds.

Indeed, it has been a combination of high yields and relatively low default rates that have driven investors to muni bond ETFs. The Market Vectors High-Yield Municipal Index ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>), which has almost $896 million in assets under management, has surged 10.5 percent year-to-date. HYD pays a monthly dividend with a 30-day SEC yield of 4.82 percent and a trailing 12-month yield of five percent.

Other high-yield muni bond funds have gotten in on the act as well. The SPDR Nuveen S&amp;P High Yield Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>) has jumped 9.44 percent this year. With almost $144 million in AUM, HYMB features a 30-day SEC yield of 4.53 percent.

Colby notes declining yields on muni issues have bolstered year-to-date returns and helped drive inflows. 

"Through September, municipal mutual funds and ETFs have witnessed 43 consecutive weeks of positive cash inflows," <a href="http://www.vaneck.com/Templates/Blog.aspx?id=2147490126&amp;blogid=2147483856">Colby wrote in the note</a>. 

In theory, an elevated number of municipal defaults should be having an adverse impact on muni bond ETFs, but that has not been the case. One fact that may be keeping ETFs such as HYD and HYMB steady is that default rates are still not at troublesome levels. Arguably, the default risk in the muni bond market is overstated. Colby noted in an interview earlier this year with Benzinga that muni bonds are a $3.7 trillion marketplace, but only 2% of that number trades on any given day

In that interview, he said <a href="http://www.benzinga.com/markets/bonds/12/05/2595919/muni-bond-etfs-and-retirees-a-match-made-in-heaven#ixzz297BVMYfh">"less than one half of one percent"</a> of rated bond issues default.

Even the iShares S&amp;P California AMT-Free Municipal Bond Fund (NYSE: <a class="ticker" href="/stock/cmf#NYSE">CMF</a>), which focuses on muni issues from financially-challenged California, has soared 5.2 percent this year. California issues also account for 22 percent of HYD's weight. The Market Vectors Intermediate Municipal Index ETF (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>) is another example of an ETF heavy on California issues that has thrived despite the negative headlines flowing from the nation's largest state. 

ITM has trailing 12-month yield of almost three percent and has risen nearly four percent this year despite a 15 percent allocation to California.

Looking ahead, Colby's forecast is bullish, but he cautions investors that there are potential issues to be aware of.

"I believe we can expect continued good performance but with the following two caveats: (1) political risk in the form of potential changes to, or elimination of, the tax-exempt nature of municipal interest, and (2) credit deterioration resulting from weak underlying economics. Either could have an adverse impact on the market," he wrote.

For more on muni bond ETFs, click <a href="http://www.benzinga.com/markets/bonds/12/05/2595919/muni-bond-etfs-and-retirees-a-match-made-in-heaven">here</a>.

Short Ideas

Dividends

After-Hours Center

iShares S&P California AMT-Free Municipal Bond Fund

Colby Bullish On Municipal Bonds For Rest of 2012

As an asset class, municipal bonds have had plenty of negative headlines to deal with in the past several years. There was the credit crisis of 2008 and the ensuing recession of 2009-2010. Last year, noted analyst Meredith Whitney was featured on "60 Minutes," warning of impending doom in the muni bond market.

Also in 2011, Jefferson County, Alabama and Harrisburg, Pennsylvania, the Keystone State's capital, defaulted on muni bond obligations. Stockton, California followed suit earlier this year. Speaking of California, the largest U.S. state by GDP and population, is running deficits that have some pondering further municipal defaults. 

But just as they did in 2011 <a href="http://www.benzinga.com/markets/bonds/12/01/2263499/ripe-for-the-picking-time-to-short-muni-bonds">muni bond ETFs are defying logic in 2012, offering not only solid returns, but a valid avenue for investors looking to do some retirement planning</a>.

"Despite low interest rates, munis will continue to draw appeal among baby boomers because they prefer the low volatility compared to other asset classes," James Colby, portfolio manager and senior municipal strategist for Market Vectors municipal bond investments, said in an interview with Benzinga. "Munis continue to come through the crucible and they're no worse for the wear."

Part of the allure municipal bond ETFs hold for retirees is their steady, tax-free income stream. All six Market Vectors muni bond ETFs pay monthly dividends. The $3 billion iShares S&amp;P National AMT-Free Municipal Bond Fund (NYSE: <a class="ticker" href="/stock/mub#NYSE">MUB</a>) also features a monthly distribution. The monthly payout highlights one advantage of an ETF over owning an individual muni issue.

"If you buy an individual bond, you get a semi-annual coupon payment," Colby noted. "With muni bond ETFs, you get monthly dividends that are tax exempt and that's an appealing feature for retirees."

Arguably, the default risk in the muni bond market is overstated. Colby notes muni bonds are a $3.7 trillion marketplace, but only 2% of that number trades on any given day. 

"Less than half of 1% of all rated bond issue default," according to Colby. "We will continue to see entities run into great difficulties, but the muni bond market has a great ability to compartmentalize the problem children. One default doesn't provide for contagion across other issues."

Investors seem to be buying into that, having added $11.4 billion to U.S. municipal mutual funds this year, the best start since 1993, <a href="http://www.bloomberg.com/news/2012-05-14/most-buying-since-1993-refutes-default-wave-specter-muni-credit.html">Bloomberg reported citing Lipper data</a>. 

Along those lines, the Market Vectors Long Municipal Index ETF (NYSE: <a class="ticker" href="/stock/mln#NYSE">MLN</a>) has risen 6% this year despite <a href="http://www.benzinga.com/markets/bonds/12/05/2594825/5-etfs-for-retirement-planning-mub-pgf-vtv">a heavy allocation to issues from financially-downtrodden California</a>. Low fees of 0.24%, a trailing 12-month yield of almost 4.2% and a monthly dividend make this fund a compelling retirement planning option.

"There are a lot of headlines touting negativity in the muni bond marketplace, but this hasn't sent investors scurrying away from the asset class," said Colby. 

Colby also noted "a huge mismatch between supply and demand" in the high yield space, a catalyst that helps explain why the Market Vectors High-Yield Muni ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>) is up almost 9% this year.

With $604.4 million in AUM, a 0.35% expense ratio and a trailing 12-month yield of almost 5.3%, HYD has outperformed more noteworthy bond ETFs by significant margins this year, including the Vanguard Total Bond Market ETF (NYSE: <a class="ticker" href="/stock/bnd#NYSE">BND</a>), the PIMCO Total Return ETF (NYSE: <a class="ticker" href="/stock/bond#NYSE">BOND</a>) and the iShares Barclays TIPS Bond (NYSE: <a class="ticker" href="/stock/tip#NYSE">TIP</a>).

Other muni bond ETFs suitable for retirement include the Market Vectors Intermediate Muni ETF (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>), the Market Vectors Pre-Refunded Muni ETF (NYSE: <a class="ticker" href="/stock/prb#NYSE">PRB</a>) and the SPDR Nuveen Barclays Capital Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/tfi#NYSE">TFI</a>).

For more on municipal bond ETFs, please click <a href="http://www.benzinga.com/markets/bonds/12/01/2263499/ripe-for-the-picking-time-to-short-muni-bonds">HERE</a>.

BOND

iShares S&P National AMT-Free Municipal Bond Fund

Muni Bond ETFs And Retirees: A Match Made In Heaven?

<div>
	Broader Market Weekly Performance:</div>
<div>
	Dow +2.39%</div>
<div>
	S&amp;P +1.95%</div>
<div>
	Nasdaq +1.84%</div>
<div>
	Russell +2.02%</div>
<div>
	<a href="http://www.bookingalpha.com/">www.BookingAlpha.com</a></div>
<div>
	 </div>
<div>
	Check out my latest interview on <a href="http://www.benzinga.com/life/movers-shakers/11/02/843974/trevor-vernon-founder-of-bookingalpha-com-bulls-bears-iron-condors-">Benzinga</a> and <a href="http://www.traderinterviews.com/free/2012-03-07_TrevorVernonOnOptions.php">TraderInterviews.com</a></div>
<div>
	 </div>
<div>
	MARKET UPDATE:</div>
<div dir="ltr">
	Three weeks into 2012 and markets continue to rocket higher. Decent earnings and a lack of headlines out of Europe have provided the market what it needed to continue squeezing any and all shorts. Add January OpEx into the equation and things get even more squirrely; aka painful for the shorts.</div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	As discussed during email correspondence with a subscriber this week, OpEx typically results in market movements that will cause the most pain for the most option market participants. This time around that meant railing the market even higher to squeeze the shorts even further. </div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	As a result, the VIX closed the week at a 5 month low. The close was below the lower Bollinger Band and far below the short term moving averages (10, 13, and 20 day moving averages). The VIX close occurred on major chart support as well. Weak VIX closes are very common at OpEx and I expect to see a bounce back up next week as it gets recalibrated for February options. </div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	The recent rally, and subsequent plummeting of the VIX, is lulling many into a false sense of comfort. The market has come too far too fast (4-7% gain across the indexes in the last 3 weeks) and needs to consolidate, digest, and back and fill to sustain a continued rally. The further we rally from here, with no meaningful pullback, the shorter I will get.</div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	For the record, I am not a bear. I actually expect S&amp;P 1340-1350 during the first half of the year. But, this rally has been too fierce and quick to sustain and it needs to pullback to test the levels from which it broke out. This would signal a move to approximately S&amp;P 1280. </div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	In the meantime, I will continue to sell into this rally via Bear Call Spreads and In The Money (<a class="ticker" href="/stock/itm#">ITM</a>) Bear Put Spreads. I will leave myself room to be wrong in the event the rally continues but will not be getting short puts anytime soon. I am cautions about short puts because when we get a break downward, to is likely to be swift. Being short puts at this juncture is a recipe for disaster. Instead, use conservative strategies above the market to insulate yourself from a rapid decline as it will happen.....at some point.</div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	Navigate wisely and stay profitable, my friends. Happy trading!</div>
<div dir="ltr">
	 </div>
<div dir="ltr">
	 </div>
<div>
	BOOKINGALPHA UPDATE:</div>
<div>
	Monthly Trading Service Commentary:</div>
<div dir="ltr">
	<div dir="ltr">
		<div dir="ltr">
			<div dir="ltr">
				It was a busy week in the Monthly Trading Service with roll adjustments to 2 Bear Call Spreads on QQQ &amp; SPX, execution of a new Bear Put Spread on SPY, and the successful expiration of a Bear Call Spread on RUT for +12.36% in 10 days.</div>
			<div dir="ltr">
				 </div>
			<div dir="ltr">
				 </div>
			<div dir="ltr">
				The 2 roll adjustment trades were executed to reposition the QQQ &amp; SPX Bear Call Spreads as required due to the massive rally for the last 3 weeks in the markets. Both roll adjustments repositioned the risk profiles of each spread to a more comfortable setting while receiving additional credits for doing so. This is the best of both worlds in options trading.</div>
			<div dir="ltr">
				 </div>
			<div dir="ltr">
				 </div>
			<div dir="ltr">
				The new SPY Bear Put Spread was deployed to take advantage of an overdue pullback or at least a slowing of the current rally. The spread is nicely Out of The Money (OTM) and will profit quickly on any pullback. A stalling of the rally will also generate profits for the position as well as premium value will decay of the short strike sold.</div>
			<div dir="ltr">
				 </div>
			<div dir="ltr">
				 </div>
			<div dir="ltr">
				Lastly, the existing RUT spread expired for full profits with January options expiration on Friday.</div>
			<div dir="ltr">
				 </div>
			<div dir="ltr">
				 </div>
			<div dir="ltr">
				With the expiration of the RUT spread and the new SPY position, the Monthly Portfolio is 60% invested with the remaining 40% in cash.</div>
			<div dir="ltr">
				 </div>
			<div dir="ltr">
				The Monthly Advisory continues to outperform and deliver consistent drama-free Alpha:</div>
			<div dir="ltr">
				<div dir="ltr">
					+2.10% YTD BookingAlpha Monthly Advisory </div>
				<div dir="ltr">
					vs. </div>
				<div dir="ltr">
					+4.48% YTD S&amp;P 500</div>
			</div>
		</div>
	</div>
	See <a href="http://www.bookingalpha.com/site/index.php?option=com_content&amp;view=article&amp;id=54:trading-record&amp;catid=37&amp;Itemid=30">Trading Record</a></div>
<div dir="ltr">
	 </div>
<div>
	Weekly Trading Service Commentary: </div>
<div dir="ltr">
	<div dir="ltr">
		<div dir="ltr">
			<div dir="ltr">
				<div dir="ltr">
					<div dir="ltr">
						<div dir="ltr">
							 </div>
					</div>
					<div dir="ltr">
						There was no trade for this week's Weekly Options Expiration due to a lack of prudent opportunities. However, a new trade was opened on Friday using Feb Monthly options. The trade is a Bear Put Spread on IWM to position for a pullback, or at least a slower rally than experienced lately.</div>
					<div dir="ltr">
						 </div>
					<div dir="ltr">
						 </div>
					<div dir="ltr">
						IWM is the most overbought of the indexes advancing &gt;5.5% in the past 3 weeks alone. This is an unsustainable pace that cannot continue. Keeping in mind that markets can stay irrational longer than any one trader can stay solvent, I executed a deep in the money Bear Put Spread.</div>
					<div dir="ltr">
						 </div>
					<div dir="ltr">
						 </div>
					<div dir="ltr">
						The IWM position provides a nice buffer in the event the rally continues short term. I used Feb options to provide extra time for the position to work out if the rally does indeed continue short term. However, any further rally will be short lived due to the extreme overbought circumstances of the market.</div>
					<div dir="ltr">
						 </div>
					<div dir="ltr">
						<div dir="ltr">
							 </div>
						<div dir="ltr">
							The Weekly Advisory continues to outperform and deliver Alpha:</div>
						<div dir="ltr">
							+5.30% YTD BookingAlpha Weekly Advisory</div>
						<div dir="ltr">
							vs.</div>
						<div dir="ltr">
							+4.48% YTD S&amp;P 500</div>
					</div>
					See <a href="http://www.bookingalpha.com/site/index.php?option=com_content&amp;view=article&amp;id=54:trading-record&amp;catid=37&amp;Itemid=30">Trading Record</a></div>
			</div>
		</div>
	</div>
</div>

Markets Continue Higher for 3 Weeks Straight

ETFs tracking municipal bonds <a href="http://www.benzinga.com/markets/bonds/11/11/2156076/van-eck-proving-its-not-all-bad-for-muni-bond-etfs">defied logic in 2011</a>. Well, at least they proved doubters, Meredith Whitney among them, wrong on the road to some stellar performances. 

Yes, concerns about major budget issues facing scores of U.S. states, cities and towns were and still are legitimate. However, yield-starved investors put those concerns on the back burner and did some serious shopping with muni bond ETFs.

There are no guarantees of imminent declines, but looking at the charts and indicators of many muni bond ETFs, it's clear this group has moved up in a big way and the time might be right for some profit-taking if not all out shorting of these ETFs.

Unfortunately, there isn't an inverse muni bond ETF on the market. Not yet anyway, but the highly liquid muni bond ETFs are shortable. Let's look at a few candidates.

iShares S&amp;P National AMT-Free Muni Bond ETF (NYSE: <a class="ticker" href="/stock/mub#NYSE">MUB</a>)
With almost $2.6 billion in assets under management, the iShares S&amp;P National AMT-Free Muni Bond ETF is the big kahuna of the muni bond ETF block. The bigger they are, the harder they fall, right? Maybe. If MUB fails to break through resistance in the $111 area, it could slide down to support at $107. From there, next support is the 200-day moving average below $104. MUB is shortable and there are options trading on the ETF so bears have two avenues for their aggression.

Market Vectors High-Yield Muni ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>)
The Market Vectors High-Yield Muni ETF is bit easier to play with than MUB because it doesn't feature a triple price tag. What HYD does feature is a chart that is quite strong as the ETF has rallied $4 since August (that's pretty good among muni bond funds). Bears would do well to wait for HYD to test resistance at $31 and fail there before shorting this ETF. HYD must be shorted directly as there are no options on this ETF.

PIMCO Intermediate Muni Bond Strategy ETF (NYSE: MUNI)
We admit we advised looking at MUNI <a href="http://www.benzinga.com/markets/bonds/12/01/2261123/five-more-actively-managed-etfs-your-broker-didnt-mention">from the long side yesterday</a>. We'd lean that way for the time being, but if MUNI violated support at $52.50, that would be a sell signal. MUNI has no options available, so it must be shorted directly. Just be aware of its light trading volume.

Market Vectors Intermediate Muni ETF (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>)
The Market Vectors Intermediate Muni ETF is kind of an under-the-radar play among muni bond ETFs, but it has a whopping $373 million in AUM and notched an impressive 2011 performance. Does that make it vulnerable to a pullback? Sure, but when? ITM has kept the good times rolling in 2012 and would not be worth shorting unless it failed to break resistance at $23.50 a couple of times or fell below $22 before then. Average daily volume is decent, which is a plus since there are no options on this one either.

Technicals

Ripe For The Picking: Time to Short Muni Bonds?

In what has been a controversial year for muni bond ETFs, some are standing above the rest and some of those standout funds can be found in Van Eck's Market Vectors ETF family. In a statement issued today, Van Eck noted that several of its muni bond ETFs have seen robust inflows from investors this year. 

Van Eck said the six Market Vectors ETFs offering muni bond exposure had $810 million in assets under management as of Nov. 11 and the Market Vectors Intermediate Muni ETF (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>) recently crossed the $300 million in AUM level earlier this month. ITM was recently named “Best In Class” by Kiplinger's.

The Market Vectors Intermediate Muni ETF, Market Vectors Long Municipal Index ETF (NYSE: <a class="ticker" href="/stock/mln#NYSE">MLN</a>) and the Market Vectors Short Municipal Index ETF (NYSE: <a class="ticker" href="/stock/smb#NYSE">SMB</a>) also received four-star ratings from Mornings star at the end of October, Van Eck said in the statement.

“Over the past year, we've seen everything from unfulfilled predictions of massive defaults in the municipal market, to a shift in bond pricing that pushed absolute yields on many tax-exempt bonds well above those of comparable Treasuries,” Van Eck muni bond strategist James Colby said in the statement. “However, at the end of it all, many investors have generally benefited from having exposure to the asset class, both on an income-generating and total return basis.”

Van Ecks other muni bond ETFs are the Market Vectors High-Yield Muni ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>), the Market Vectors Pre-Refunded Muni ETF (NYSE: <a class="ticker" href="/stock/prb#NYSE">PRB</a>) and the Market Vectors CEF Municipal Income ETF (NYSE: <a class="ticker" href="/stock/xmpt#NYSE">XMPT</a>).

Van Eck Proving It's Not All Bad For Muni Bond ETFs

Cusick's Corner 
To say that this was an ugly close is an understatement. Now here's the good and the bad. The good is that the day is over (especially if you were long). The bad is that the market was down (300 on the Dow). This was a solid distribution day with a close below the lows of yesterday and volume to boot. This move caught most traders and investors off guard and the Claims data out tomorrow might only amplify the downside push. The Flight to Safety trade was in full bloom -- treasury yields hit their lows, sub 3% on the 10 yr. For those who are on the sidelines, closet bulls, and are looking at this pullback as a potential entry point, look at in-the-money (<a class="ticker" href="/stock/itm#">ITM</a>) call spreads, especially if the volatility has popped. This strategy takes a conservative approach because you are buying ITM calls and to mitigate the premium risk with this purchase, you sell at-the-money calls, mitigating volatility risk and premium risk of the long option. You do give up upside but fixed risk might allow you to sleep better. See you Midday. 
The month of June is off to a rocky start on Wall Street. Stock index futures came under pressure before the stock exchanges opened after ADP reported that the US economy added just 38,000 private sector payrolls during the month of May. Economists were looking for an increase of 170,000. After a 128-point rally Tuesday, the Dow Jones Industrial Average opened sharply lower on the poor jobs number. Data released later showed Construction Spending up .4 percent in April, which was above expectations of -.5 percent. However, the latest ISM Index of manufacturing activity fell to 53.5 last month, which was down from 60.4 in April and well below expectations of 57.6. The weak manufacturing number added to the worries and the Dow was down 145 points at midday. Selling pressure intensified a bit in the second half of trading and, at the closing bell, the industrial average had lost 280 points. The tech-heavy NASDAQ took a 66-point hit. 
Bullish 
Oil service company Ensco (<a class="ticker" href="/stock/esv#">ESV</a>) saw relative strength and bullish options action today. Shares of the London-based driller gained 98 cents to $54.30 after UBS upgraded the stock to Buy from Neutral. Options volume was 6X the average daily. 18,000 calls and 10,000 puts traded in the name. The biggest options trades hit on the CBOE in morning trading, as July 48 puts traded at 60 cents and July 55 calls at $1.77 and $1.78. One investor was paying $1.18 and $1.17 for the July 48 - 55 bullish risk-reversal and did the trade 7500X according to a source on the exchange floor. They were buying 7,500 July 55 calls and selling 7,500 July 48 puts. The bullish play, which appears to be opening, will pay off if shares continue to rally through the July expiration in 44 days.
Bullish trading was also seen in Orexigen Therapeutics (<a class="ticker" href="/stock/orex#">OREX</a>), Apollo (<a class="ticker" href="/stock/apol#">APOL</a>), and Petrohawk (<a class="ticker" href="/stock/hk#">HK</a>).
Bearish 
TIVO puts were heavily traded today. After gaining 9.5 percent last week, shares gave up 19 cents to $10.15 today and are off 2.1 percent on the week. Meanwhile, options volume in TIVO was clearly lop-sided, as 19,000 puts and 4,000 calls traded in the name. January 11 puts, which are now 7.7 percent in-the-money, were the most actives. 8,441 traded and, with 70 percent trading at the ask and no existing open interest, the action looks like opening put buying. August 10, November 9, November 10 and November 11 puts saw interest as well. Implied volatility increased by 8 percent to 45.5, as some investors seem to be bracing for a potential drop in TIVO shares in the months ahead.
Bearish flow also surfaced in Calpine (<a class="ticker" href="/stock/cpn#">CPN</a>), Bank of Ireland (<a class="ticker" href="/stock/ire#">IRE</a>), and Rite Aid (<a class="ticker" href="/stock/rad#">RAD</a>).
Index Trading 
CBOE Volatility Index (.VIX) sprung back to life today. The market's "fear gauge" jumped 2.85 to 18.30, as risk perceptions were on the rise today. Not only did VIX move up, but safe haven buying gave a bid to bonds and gold. While the yellow metal gained $2.40 to $1,538.30, the yield on the ten-year Treasury note, which moves opposite to price, dipped below 3 percent for the first time this year. Meanwhile, defensive trading was seen in the index market. 759,000 puts and 490,000 calls traded across the S&amp;P 500 Index (.SPX), S&amp;P 100 Index (.OEX) and other cash indexes. VIX June 15 puts were the most actives. Beyond that, SPX short-term OTM puts, like the June 1,300s, saw heavy trading. The S&amp;P 500 lost 30.65 points to 1,314.55.
ETF Action 
Put volume picked up in the SPDR Retail Trust (<a class="ticker" href="/stock/xrt#">XRT</a>). This exchange-traded fund tracks the performance of more than 90 different retailers and lost $1.57 to $52.57 on the day. The options volume was 106,000 puts and 11,000 calls. One noteworthy trade surfaced midday when a 10,000-contract block of September 48 puts traded on the $1.05 bid price. At the same time, 5,000 Sep 44 puts traded at the 52-cent asking price and 5,000 Sep 52 puts at the $2.20 asking price. The trade is a butterfly spread, in which the strategist sold the September 48 puts for the body and bought half as many of the 44s and 52s for the wings. This spread is a bearish play, as it makes its best profits if shares fall to $48 through the September expiration.

APOL

Governor And Company Of The Bank Of Ireland

OREX

The Good, The Bad & The Ugly  06-01-2011

<img class="s3-img alignright" style="margin-top: 2px; margin-bottom: 2px; margin-left: 3px; margin-right: 3px;" title="Delta Pointers" src="http://oh-image.s3.amazonaws.com/January 2011/Delta.jpg" border="0" alt="Delta Pointers" width="216" height="213" /> Delta is a numerical value that describes an option in several interesting and useful ways, such as how much the option's price should move for a $1 move in the underlying stock, how much the option is almost exactly like its stock, and what the probability is of the option being in-the-money by expiration.
A short definition of delta would be the sensitivity of an option's price to changes in the underlying price. A shorter definition would be the speed of the option. If an option has a delta of 0.500, you can think of this as 50% and it means that if the underlying stock moves $1 (higher or lower), the option price will move only 50 cents (again, higher or lower).
Delta is calculated within an option pricing model by a function that compares the option strike price to the underlying stock price and accounts for probability and the passage of time. That mouthful sounds complicated, but if you know a little about options already, you can break this down step-by-step. First, comparing the option strike price to the underlying stock tells you about its value. Since an option gives you the right to be long or short the stock, its value is comprised of intrinsic value (the real worth it has if it is in-the-money) + time value (the worth it has due to future possible price movement).
Second, the option pricing model assigns a probability to every option that quantifies the likelihood of that option finishing in-the-money (ITM). This number is the delta, and it changes dynamically as underlying prices change and time passes. The number produced by the pricing model is between 0.000 and 0.999, and traders speak of 0.103 as a “10-delta” and 0.591 as a “60-delta.”
<h3>The INs, ATs &amp; OUTs of the Money</h3>
At-the-money (ATM) options have deltas of around 0.500 (a “50-delta”), which means they have roughly a 50% probability of finishing in-the-money come expiration. This makes sense because buying an ATM option is like a coin toss. We have a 50/50 shot at being right about a $40 stock moving up or down tomorrow or next month and causing either the 40 call or put to move in-the-money.
What deltas do out-of-the-money (OTM) options have? Less than 0.500, as you might have guessed, because they should theoretically have less than a 50% chance of finishing ITM. So with stock at $40, the $45 call might have a delta of .300 (a “30-delta”), and the $35 put might have a delta of -0.300 (also a “30-delta” but of the put variety).
Correspondingly, that means ITM options should have deltas of greater than 0.500 because they have more than a 50% chance of finishing ITM. So with the stock at $40, the $35 call might have a delta of 0.700, and the $45 put might have a delta of -0.700. Deep ITM calls and puts have deltas really close to 0.999 and -0.999, so the $25 call might have a delta of 0.95 and the $55 put might have a delta of -0.95. By the way, why do puts have a negative sign in front of them?
<h3>Calls Have Positive Delta, Puts Have Negative Delta</h3>
The next thing we need to learn about delta is how it's calculated differently for puts and calls. And the only real difference we need to worry about is that calls have positive delta to indicate their inherent long position and puts have negative delta to indicate their inherent short position. We mark calls on the probability scale from 0.000 to +1.00, and puts from 0.000 to -1.00, with the whole numbers +1.00 and -1.00 representing the stock itself. Traders speak of stock as a “100 delta” position because the next one-thousandth up from 0.999 is 1.00.
What do all little options want to be when they grow up? A full 100 shares of stock, of course! In other words—assuming options had feelings and wishes—they'd want to finish in-the-money… which means they'd want to have a delta equal to that of +1.00 for calls, or -1.00 for puts. Until expiration day, and we know the final destiny of those yet-to-mature options, their deltas tend to stay within the probability scale of +0.999 to 0.000 for calls, and -0.999 to 0.000 for puts. And here's how the delta of an option moves as the underlying stock price moves: if stock moves from $40 to $44, the delta of the 40 call might move from 0.50 to 0.65, while the delta of the 40 put might move from -0.50 to -0.35. Notice that as the stock price rose, the call gained in delta value while the put lost delta value.
<h3>Delta Tells You How an Option is Similar to its Stock</h3>
Since options want to grow up to be like stock, but they have this funny tendency to follow the stock back and forth as if it's a tug of war between the calls and the puts, delta could be described as a measure of who's winning. Delta tells you minute-by-minute how far each side has come and how far each little strike still has to go to become a full 100 deltas.
Options that are deep ITM have deltas close to 0.999 for calls and -0.999 for puts because they are nearly 100% like the underlying stock.
Traders might speak of these deep options as “100 delta” or as “trading for parity” because they have almost no time value relative to their large intrinsic value. They might also call them “an exercise” because they are so likely to be exercised at expiration, or sooner if there is a dividend event or they are part of a hedge that needs to be unwound. Options that are deep OTM have deltas close to 0.000 and thus they have almost zero equivalence to the underlying stock.
As the underlying stock price changes, an option's delta must change too. As stock rises, call deltas move away from zero, closer to +1.00, and put deltas move away from -1.00, closer to zero. As stock falls, call deltas move away from +1.00, closer to zero, and put deltas move away from zero, closer to -1.00. 
<h3>How to Use Delta to Gage Option Buying vs. Selling</h3>
 
 
 
Some traders may use changes in delta to figure out if options are being bought or sold. Since option markets are so liquid and competitive, option prices tend to move in lock-step during the trading day with their stocks. So you would expect all “30-delta” options to move about 30 cents for every $1 move in the underlying stock. A $1 up move would have the calls up 30 cents and the puts down 30 cents, and vice versa for a $1 move lower in the stock. 
What if the stock moved $1 higher and the 30-delta calls only moved 15 cents higher? Someone was probably selling those calls (trading them on or near the bid) and the market makers were perfectly willing to let them do so. What if the stock moved $1 lower and the 30-delta puts moved 50 cents higher? It's likely that someone was buying those puts (at or near the ask price) because they moved far higher in price than their delta would dictate was fair value. 
<h3>Three Ways to Think About Delta That Make It Such a Great Tool </h3>
Here's a handy reference guide to delta to help you remember its power… 
1. Delta is the rate of change of the option relative to its underlying stock—in essence, the speed of the option.
2. Delta is the probability the option will finish in-the-money—i.e., how likely is it the option will end up trading for parity because it is virtually equal to a position in the stock from the strike price?
3. Delta is the “hedge ratio” or equivalence to the underlying stock—i.e., it tells you how much stock you need to buy or sell to exactly hedge an option position. 
Note: This content was previously published by the Options News Network.1 It has been edited slightly from the original version.  The Options News Network was previously affiliated with OptionsHouse, LLC, through our mutual parent company, PEAK6 Investments, LP.
 
 
Share and Enjoy:
	<a rel="nofollow" target="_blank" href="http://digg.com/submit?phase=2&amp;url=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F&amp;title=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks&amp;bodytext=%20Delta%20is%20a%20numerical%20value%20that%20describes%20an%20option%20in%20several%20interesting%20and%20useful%20ways%2C%20such%20as%20how%20much%20the%20option%E2%80%99s%20price%20should%20move%20for%20a%20%241%20move%20in%20the%20underlying%20stock%2C%20how%20much%20the%20option%20is%20almost%20exactly%20like%20its%20stock%2C%20and%20what%20the%20p" title="Digg"><img src="/wp-content/plugins/sociable/images/digg.png" title="Digg" alt="Digg" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://delicious.com/post?url=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F&amp;title=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks&amp;notes=%20Delta%20is%20a%20numerical%20value%20that%20describes%20an%20option%20in%20several%20interesting%20and%20useful%20ways%2C%20such%20as%20how%20much%20the%20option%E2%80%99s%20price%20should%20move%20for%20a%20%241%20move%20in%20the%20underlying%20stock%2C%20how%20much%20the%20option%20is%20almost%20exactly%20like%20its%20stock%2C%20and%20what%20the%20p" title="del.icio.us"><img src="/wp-content/plugins/sociable/images/delicious.png" title="del.icio.us" alt="del.icio.us" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.facebook.com/share.php?u=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F&amp;t=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks" title="Facebook"><img src="/wp-content/plugins/sociable/images/facebook.png" title="Facebook" alt="Facebook" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.google.com/bookmarks/mark?op=edit&amp;bkmk=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F&amp;title=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks&amp;annotation=%20Delta%20is%20a%20numerical%20value%20that%20describes%20an%20option%20in%20several%20interesting%20and%20useful%20ways%2C%20such%20as%20how%20much%20the%20option%E2%80%99s%20price%20should%20move%20for%20a%20%241%20move%20in%20the%20underlying%20stock%2C%20how%20much%20the%20option%20is%20almost%20exactly%20like%20its%20stock%2C%20and%20what%20the%20p" title="Google Bookmarks"><img src="/wp-content/plugins/sociable/images/googlebookmark.png" title="Google Bookmarks" alt="Google Bookmarks" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.linkedin.com/shareArticle?mini=true&amp;url=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F&amp;title=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks&amp;source=OptionsHouse+-+Market+Observations+from+Options+Trading+Experts&amp;summary=%20Delta%20is%20a%20numerical%20value%20that%20describes%20an%20option%20in%20several%20interesting%20and%20useful%20ways%2C%20such%20as%20how%20much%20the%20option%E2%80%99s%20price%20should%20move%20for%20a%20%241%20move%20in%20the%20underlying%20stock%2C%20how%20much%20the%20option%20is%20almost%20exactly%20like%20its%20stock%2C%20and%20what%20the%20p" title="LinkedIn"><img src="/wp-content/plugins/sociable/images/linkedin.png" title="LinkedIn" alt="LinkedIn" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="/feed/" title="RSS"><img src="/wp-content/plugins/sociable/images/rss.png" title="RSS" alt="RSS" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.stumbleupon.com/submit?url=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F&amp;title=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks" title="StumbleUpon"><img src="/wp-content/plugins/sociable/images/stumbleupon.png" title="StumbleUpon" alt="StumbleUpon" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="mailto:?subject=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks&amp;body=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F" title="email"><img src="/wp-content/plugins/sociable/images/email_link.png" title="email" alt="email" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.mixx.com/submit?page_url=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F&amp;title=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks" title="Mixx"><img src="/wp-content/plugins/sociable/images/mixx.png" title="Mixx" alt="Mixx" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://tipd.com/submit.php?url=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F" title="Tipd"><img src="/wp-content/plugins/sociable/images/tipd.png" title="Tipd" alt="Tipd" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.tumblr.com/share?v=3&amp;u=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F&amp;t=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks&amp;s=%20Delta%20is%20a%20numerical%20value%20that%20describes%20an%20option%20in%20several%20interesting%20and%20useful%20ways%2C%20such%20as%20how%20much%20the%20option%E2%80%99s%20price%20should%20move%20for%20a%20%241%20move%20in%20the%20underlying%20stock%2C%20how%20much%20the%20option%20is%20almost%20exactly%20like%20its%20stock%2C%20and%20what%20the%20p" title="Tumblr"><img src="/wp-content/plugins/sociable/images/tumblr.png" title="Tumblr" alt="Tumblr" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://twitter.com/home?status=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks%20-%20%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F" title="Twitter"><img src="/wp-content/plugins/sociable/images/twitter.png" title="Twitter" alt="Twitter" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://buzz.yahoo.com/submit/?submitUrl=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F&amp;submitHeadline=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks&amp;submitSummary=%20Delta%20is%20a%20numerical%20value%20that%20describes%20an%20option%20in%20several%20interesting%20and%20useful%20ways%2C%20such%20as%20how%20much%20the%20option%E2%80%99s%20price%20should%20move%20for%20a%20%241%20move%20in%20the%20underlying%20stock%2C%20how%20much%20the%20option%20is%20almost%20exactly%20like%20its%20stock%2C%20and%20what%20the%20p&amp;submitCategory=science&amp;submitAssetType=text" title="Yahoo! Buzz"><img src="/wp-content/plugins/sociable/images/yahoobuzz.png" title="Yahoo! Buzz" alt="Yahoo! Buzz" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.friendfeed.com/share?title=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks&amp;link=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F" title="FriendFeed"><img src="/wp-content/plugins/sociable/images/friendfeed.png" title="FriendFeed" alt="FriendFeed" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://reddit.com/submit?url=%2Fblog%2Fdelta-breaking-down-the-first-of-the-greeks-727%2F&amp;title=Delta%3A%20Breaking%20Down%20the%20First%20of%20the%20Greeks" title="Reddit"><img src="/wp-content/plugins/sociable/images/reddit.png" title="Reddit" alt="Reddit" class="sociable-hovers" /></a>
 
Related posts:
<ol>
<li><a href='/blog/read-this-if-you-want-to-be-serious-about-options-trading-632/' rel='bookmark' title='Permanent Link: READ THIS! If You Want to Be Serious About Options Trading'>READ THIS! If You Want to Be Serious About Options Trading</a></li>
<li><a href='/blog/event-based-option-trading-put-spreads-vs-long-calls-545/' rel='bookmark' title='Permanent Link: Event-Based Option Trading: Put Spreads vs. Long Calls'>Event-Based Option Trading: Put Spreads vs. Long Calls</a></li>
</ol>

LULU

Delta: Breaking Down the First of the Greeks

Here is the ETF Professor's ETF Watch List for Tuesday January 11, 2011.
The Guggenheim Global Solar Energy ETF (NYSE: <a class="ticker" href="/stock/tan#NYSE">TAN</a>) got a nice bounce on Monday, jumping almost 3%. 
The Direxion Daily Semicondct Bull 3X Shares (NYSE: <a class="ticker" href="/stock/soxl#NYSE">SOXL</a>) continues to impress.
Keep an eye on the Global X Aluminum ETF (NYSE: <a class="ticker" href="/stock/alum#NYSE">ALUM</a>) on Tuesday.
Emerging markets plays of the day: ProShares UltraShort Brazil (NYSE: <a class="ticker" href="/stock/bzq#NYSE">BZQ</a>), Market Vectors Indonesia ETF (NYSE: <a class="ticker" href="/stock/idx#NYSE">IDX</a>) and the Direxion Daily India Bull 2X Shares (NYSE: INDL).
Forex play of the day: PowerShares DB G10 Currency Harvest ETF (NYSE: <a class="ticker" href="/stock/dbv#NYSE">DBV</a>).
Bond play of the day: Market Vectors Intermediate Muni ETF (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>).

ALUM

SOXL

ETFs To Watch January 11, 2011 (ALUM, BZQ, DBV, IDX)

U.S. Consensus published the population data that they rigorously constructed throughout the summer. Michigan was the only state out of the 50 that had a decrease in population (along with a congressional seat) at a modest .6%, since the last time data was collected. Texas on the other hand, gained the most congressional seats and population.
What does this all mean?
How to trade it: Bonds, Bonds, &amp; More Bonds…
One could anticipate further tax revenue growth collected by the IRS in regions that had population increases. This allows smaller municipalities to have more capital to pay of long-term debts. Thus, muni bond solvency increases and they will maintain or attain higher credit ratings. 
Meanwhile, smaller municipalities in regions where Michigan received large deviations to the downside in population; will have less tax revenue. With less tax revenue, increased pressure to pay long term muni bond debt will occur if fiscal cuts at local levels does not occur.
For example, Pontiac, MI, muni bonds are in the top ten for highest yields to maturity. Indicating that the population is exporting elsewhere to places in coastal regions and southwest states. Along with Pontiac's “rust belt” stigma of fading auto manufacturing aids to the associated risk.
Also consider that fact that Michigan has over a 12% unemployment rate, and people have to migrate to achieve work. States in middle America such as Oaklahoma, Nebraska, Kansas, and South Dakota local municipalities have a lower unemployment rate which adds to low bond yields.
Ways to trade bonds
Easiest way for a retail investor to have exposure to bonds is with the recent upheaval in bond ETF's.
SPDR Lehman California Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/cxa#NYSE">CXA</a>)
S&amp;P Short-Term National AMT-Free Municipal Bond Fund (NYSE: <a class="ticker" href="/stock/sub#NYSE">SUB</a>)
SPDR Lehman Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/tfi#NYSE">TFI</a>)
SPDR Lehman New York Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/iny#NYSE">INY</a>)
SPDR Lehman Short Term Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/shm#NYSE">SHM</a>)
SPDR S&amp;P VRDO Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/vrd#NYSE">VRD</a>)
Market Vectors Intermediate Municipal Index ETF (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>)
Market Vectors AMT-Free Long Municipal Index ETF (NYSE: <a class="ticker" href="/stock/mln#NYSE">MLN</a>)
Pre-Refunded Municipal Bond Index ETF (NYSE: <a class="ticker" href="/stock/prb#NYSE">PRB</a>)
iShares Lehman 20+ Year Treasury Bond Fund (NYSE: <a class="ticker" href="/stock/tlt#NYSE">TLT</a>)
Aggressive Leveraged Bond ETF's
ProShares Ultra Short 20+ Year Treasury Bond ETF (NYSE: <a class="ticker" href="/stock/tbt#NYSE">TBT</a>)
Direxion 10-Year Treasury Bear 3X ETF (NYSE: <a class="ticker" href="/stock/tyo#NYSE">TYO</a>)
Direxion 10-Year Treasury Bull 3X ETF (NYSE: <a class="ticker" href="/stock/tyd#NYSE">TYD</a>)
Direxion 30-Year Treasury Bear 3X ETF (NYSE: <a class="ticker" href="/stock/tmv#NYSE">TMV</a>)
Direxion 30-Year Treasury Bull 3X ETF (NYSE: <a class="ticker" href="/stock/tmf#NYSE">TMF</a>)

iShares S&P Short Term National AMT-Free Municipal

ProShares UltraShort Lehman 20+ Year Treasury

iShares Trust Barclays 20+ Year Treasury Bond Fund

Direxion Daily 20+ Year Treasury Bull 3X Shares

Direxion Daily 20+ Year Treasury Bear 3X Shares

Direxion Daily 7-10 Year Treasury Bull 3X Shares

Direxion Daily 7-10 Year Treasury Bear 3X Shares

BONDS: Michigan Only State To Lose Population (CXA, SUB, TFI, INY, SHM, VRD, ITM, MLN, PRB, TLT, TBT, TYO, TYD, TMV, TMF)

Bullish on stocks? 
Here are two ways to play it with options: 
1. Buy a Call. 
2. Write a Put. 
How bullish you are will help determine which strategy is right for you. 
1) Buy a Call 
Buying Calls is one of the easiest and probably most well know option strategies. 
If you believe the price of a stock will go up, you can buy a call option on it and make money as it does.
But unlike a stock, it needs to move within a certain period of time. 
And based on the strike price you've got, it'll need to move a certain minimum amount to overcome your purchase price. 
Knowing this, there are a few things to consider when you're selecting your option. 
The first thing you'll want to consider is time. 
As a rule of thumb, unless I'm speculating on a date-specific event, I'll normally buy a little extra time than I might need. 
This gives me a little extra leeway and time in case the move I was looking for takes a bit longer than expected. 
For example, if I'm expecting a move within two months – there's no harm in picking up an extra month or two to be on the safe side – especially if that extra month could mean the difference between a profit and a loss. 
The next decision to make is if you'll pick up an in-the-money option (<a class="ticker" href="/stock/itm#">ITM</a>) or an out-of-the-money option (OTM). 
Just remember: an in-the-money option will have a greater likelihood of making money than an out-of-the-money option. 
Why? 
Because at expiration, your profit is the difference between the stock price and the strike price less your premium. 
For example: let's say a stock was trading at $50 and you had two options: 
<UL> 
<LI>1, $45 call (<a class="ticker" href="/stock/itm#">ITM</a>) for $6.50 
</li><LI>and 1, $55 call (OTM) for $3.75 
</li></ul> 
If at expiration, the stock was trading at $60, that's a 20% move in the stock. 
At expiration, the $45 call would be worth $15 or $1,500. Remove your premium of $6.50 and that's an $850 gain. 
The $55 call on the other hand would be worth only $5 or $500. Subtract your premium of $3.75, and instead you'd only have a gain of $125. 
Same stock move, but vastly different profit outcomes. Sure you saved a few hundred dollars on the way in, but look what it cost you on the backend. 
Of course, if you're wildly bullish, you could really get a lot of leverage on the cheaper out-of-the-money options. But usually, the out-of-the-money options are best only if you're expecting some pretty big things to happen. 
For your regular moves – good moves – but not astronomical moves, consider staying closer to the money as it'll increase your chances for success. 
2) Write a Put 
This strategy, unlike buying calls, is probably one of the least known option strategies. 
And also, probably one of my favorites. 
It's a bullish strategy. 
But you have more ways to profit with this one. 
When Buying Puts, the stock can go up, sideways or even down (albeit only a certain amount) and you can still make all of the money you expected to make when you put the trade on in the first place. 
Essentially, writing a put means you might be obligated to buy the underlying stock at a certain price if the stock goes down to your strike price. This is called 'having the stock put to you'. But you'll get paid for taking that risk. 
But the benefits are great. 
First, when writing a put option, I don't favor getting more time than needed. Instead, try and get only as much time as necessary to ensure a big enough premium to make the trade worth your while. This strategy will benefit from time decay. 
Moreover, I recommend writing out-of-the-money options too. Not too far out, but close enough to maximize the premium you'll collect. But far enough away so your chances of keeping the entire premium remains high. 
Continuing with the same example, let's say the stock was at $50 and you thought it was going to go higher or maybe even a little lower at first, but you liked the stock and were essentially bullish on it. 
If you wrote a put option, let's say the $45 put for $400: 
<UL> 
<LI>At expiration, as long as the price of the stock was above your strike price of $45, you'd keep the entire premium you collected. (It doesn't even have to be above $50, just your strike price of $45.) 
<LI>If the stock is at or below $45, the stock will likely be put to you, meaning you'll have to buy that stock at $45. But not only did you now get to own that stock at a cheaper price ($45 rather than $50), but you also got paid $400 while you waited and got in at a lower price. 
The stock would have to go below $41 to even begin losing money on the trade. 
</li></li></ul>
This is a great strategy if you have a neutral-to-bullish bias on a stock and would like a strategy to profit under a wide range of scenarios.
But if you're super-duper bullish on a stock, this would be the wrong strategy because you'll always be limited with what you can make. 
But your chances are good that you'll get what you expected if you correctly determined what you broadly thought the stock would do (or at least wouldn't do). 
But these two strategies, buying calls or writing puts, should be considered based on how bullish you are. 
You can learn more about different types of option strategies by downloading our free options booklet: 3 Smart Ways to Make Money with Options (Two of Which You Probably Never Heard About). <a href=http://woas.zacks.com/adv/method/mto_long.php?adid=ZMTO_HP_ARTPG>Just click here.</a>
And be sure to check out our new <a href=http://www.zacks.com/optionstrader/>Zacks Options Trader</a>. 
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.   <a href="http://www.zacks.com/">Zacks Investment Research</a>

Two Bullish Strategies - Know Your Options

The Market Vectors ETF Trust announced regular monthly distributions today for its five municipal bond ETFs and the Market Vectors Emerging Markets Local Currency Bond ETF*. 
The following dates apply to today's distribution declarations:
Ex-Date 
  
  
  
Record Date 
  
  
  
Payable Date
October 1, 2010 
  
  
  
October 5, 2010 
  
  
  
October 7, 2010
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
Distribution 
  
  
  
Distribution Amount
FUND 
  
Ticker 
  
  
  
Frequency 
  
  
  
Per Share
Market Vectors 
  
  
  
  
  
  
  
  
  
 
Intermediate Municipal Index ETF 
  
(NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>) 
  
  
  
Monthly 
  
  
  
$0.0600
  
  
  
  
  
  
  
  
  
  
 
Market Vectors 
  
  
  
  
  
  
  
  
  
 
Long Municipal Index ETF 
  
(NYSE: <a class="ticker" href="/stock/mln#NYSE">MLN</a>) 
  
  
  
Monthly 
  
  
  
$0.0640
  
  
  
  
  
  
  
  
  
  
 
Market Vectors 
  
  
  
  
  
  
  
  
  
 
Short Municipal Index ETF 
  
(NYSE: <a class="ticker" href="/stock/smb#NYSE">SMB</a>) 
  
  
  
Monthly 
  
  
  
$0.0290
  
  
  
  
  
  
  
  
  
  
 
Market [...]
Related posts:
<ol>
<li><a href='http://etfdailynews.com/blog/2010/09/01/market-vectors-fixed-income-etfs-announce-distributions-itm-mln-smb-hyd-prb-emlc/' rel='bookmark' title='Permanent Link: Market Vectors Fixed Income ETFs Announce Distributions (ITM, MLN, SMB, HYD, PRB, EMLC)'>Market Vectors Fixed Income ETFs Announce Distributions (ITM, MLN, SMB, HYD, PRB, EMLC)</a></li>
<li><a href='http://etfdailynews.com/blog/2010/08/02/market-vectors-family-of-municipal-bond-etfs-announces-distributions-itm-mln-smb-hyd-prb/' rel='bookmark' title='Permanent Link: Market Vectors Family of Municipal Bond ETFs Announces Distributions (ITM, MLN, SMB, HYD, PRB)'>Market Vectors Family of Municipal Bond ETFs Announces Distributions (ITM, MLN, SMB, HYD, PRB)</a></li>
<li><a href='http://etfdailynews.com/blog/2010/04/01/market-vectors-family-of-municipal-bond-etfs-announces-distributions-9/' rel='bookmark' title='Permanent Link: Market Vectors Family of Municipal Bond ETFs Announces Distributions'>Market Vectors Family of Municipal Bond ETFs Announces Distributions</a></li>
</ol>

Market Vectors® Fixed Income ETFs Announce Distributions (ITM, MLN, SMB, HYD, PRB, EMLC)

<img class="alignright" style="margin: 2px 4px;" title="Debit Spreads, Credit Spreads" src="http://farm4.static.flickr.com/3063/2788089212_23f2d69764_m.jpg" alt="Debit Spreads, Credit Spreads" width="270" height="195" />Option traders have many terms for what is essentially the same trade.  Bull call spreads, for example, are also known as debit call spreads or call verticals.  This is confusing enough when it is the just same trade verbalized three different ways. Furthermore, due to put/call parity rules, many entirely different strategies are essentially the same trade (at least from a risk point of view).
Let’s first look at the debit call spread (also known as a bull call spread). For illustrative purposes only, I have chosen to look at an IBM in-the-money 125/130 debit call spread.
We’ll construct the in-the-money (ITM) debit call spread using mid-market levels (as of July 13). The debit required to buy the 125 call and sell the 130 call is $3.40.  The maximum gain at expiration is then $1.60 (the difference between the strikes minus the debit paid) and the maximum loss is the $3.40 initially paid.
On the Profit/Loss Calculator, you can see the breakeven for this spread is $128.40 in the stock. Above this level, the spread will be profitable; below, the trade is a loser.
<img class="aligncenter" style="border: 1px solid black;" title="IBM bull call spread" src="http://farm5.static.flickr.com/4102/4796119703_2907b9bee7_z.jpg" alt="IBM bull call spread" width="587" height="342" />
Now look at the out-of-the-money (OTM) credit put spread which is constructed by selling the 130 put and simultaneously buying the 125 put. For this strategy, the seller collects $1.60 upfront, which equals the maximum gain.  The maximum loss is the difference between strike prices less that upfront premium ($5.00-$1.60=$3.40).  Both spreads are bullish strategies with identical risk/reward characteristics, breakeven, and payoffs. In both strategies, the trader wants the underlying shares to stay higher than $130 to achieve maximum profit and avoid losses.
<img class="aligncenter" style="border: 1px solid black;" title="IBM bull put spread" src="http://farm5.static.flickr.com/4099/4796119719_d634b5c449_z.jpg" alt="IBM bull put spread" width="582" height="341" />
<h3>To summarize: </h3>
125/130 bull call spread debit is $3.40 
Potential return on risk is $1.60/$3.40 = 47%
130/125 bull put spread credit is $1.60 
Potential return on risk is $1.60/$3.40 = 47%
The fact that the spread premiums create precisely the same return is not surprising. They are synthetically equivalent (a property of put/call parity relationships) and thus virtually identical in terms of risk/reward. Traders may be able to work into these spreads for slightly better or worse prices that will affect which one they prefer.  Be aware as well that dividends can impact the value of in-the-money calls.
So if the strategies are essentially equivalent, which is what makes synthetic option relationships work, which do you choose? It may simply depend on what type of trader you are. Here are a few reasons different traders choose among equivalent credit or debit strategies:
• For option traders who are only approved for buying spreads, they do not have a choice. Their broker or type of account may not allow any short or credit strategies. This may seem unfair since the strategies are equal, but that’s how options are treated for the security of brokers and inexperienced account holders.
• For active option traders, especially institutional professionals, it comes down to cash management and the efficient use of capital. They are able to sell more OTM spreads and iron condors because they collect premium upfront, have minimal and/or offsetting margin collateral requirements (i.e., portfolio margining), and sometimes can earn meaningful interest on balances. Additionally, professional traders are often trading these synthetically equivalent strategies to offset risk, turning a bullish spread into a “riskless” box trade.
• Psychologically, for traders who think “selling is better,” credit spreads may dominate their strategies. They may prefer selling spreads and profiting with theta and time decay.  However this is not a valid theoretical reason! Because these spreads are synthetically equivalent, the theta is the same for both the debit call spread and credit put spread.  Many traders are better at visualizing the risk after paying for the spread upfront and having that payment equal the maximum risk exposure.
A final issue affecting all traders to various degrees is commissions from exiting spreads or from exercise and assignment at or before expiration. If you sell the 130/125 bull put spread and it stays out-of-the-money as you had hoped, your options expire worthless with no additional commissions. But if the 125/130 bull call spread stays in-the-money, you will be required to either exit before expiration and pay commission(s) or pay the commissions from exercise and assignment at expiration.  At OptionsHouse, this <a href="http://optionshouse.com/rates/">exercise and assignment fee</a> amounts to $5 each leg, so this is a minimal impact.
Good hunting!  Finding the best price on the credit or debit spread of your choice can help maximize your returns!
Photo Credit: <a href="http://www.flickr.com/photos/22863752@N06/2788089212/" target="_blank">di_the_huntress</a>
Share and Enjoy:
	<a rel="nofollow" target="_blank" href="http://digg.com/submit?phase=2&amp;url=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156&amp;title=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20&amp;bodytext=Option%20traders%20have%20many%20terms%20for%20what%20is%20essentially%20the%20same%20trade.%C2%A0%20Bull%20call%20spreads%2C%20for%20example%2C%20are%20also%20known%20as%20debit%20call%20spreads%20or%20call%20verticals.%C2%A0%20This%20is%20confusing%20enough%20when%20it%20is%20the%20just%20same%20trade%20verbalized%20three%20different%20ways" title="Digg"><img src="/wp-content/plugins/sociable/images/digg.png" title="Digg" alt="Digg" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://delicious.com/post?url=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156&amp;title=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20&amp;notes=Option%20traders%20have%20many%20terms%20for%20what%20is%20essentially%20the%20same%20trade.%C2%A0%20Bull%20call%20spreads%2C%20for%20example%2C%20are%20also%20known%20as%20debit%20call%20spreads%20or%20call%20verticals.%C2%A0%20This%20is%20confusing%20enough%20when%20it%20is%20the%20just%20same%20trade%20verbalized%20three%20different%20ways" title="del.icio.us"><img src="/wp-content/plugins/sociable/images/delicious.png" title="del.icio.us" alt="del.icio.us" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.facebook.com/share.php?u=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156&amp;t=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20" title="Facebook"><img src="/wp-content/plugins/sociable/images/facebook.png" title="Facebook" alt="Facebook" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.google.com/bookmarks/mark?op=edit&amp;bkmk=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156&amp;title=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20&amp;annotation=Option%20traders%20have%20many%20terms%20for%20what%20is%20essentially%20the%20same%20trade.%C2%A0%20Bull%20call%20spreads%2C%20for%20example%2C%20are%20also%20known%20as%20debit%20call%20spreads%20or%20call%20verticals.%C2%A0%20This%20is%20confusing%20enough%20when%20it%20is%20the%20just%20same%20trade%20verbalized%20three%20different%20ways" title="Google Bookmarks"><img src="/wp-content/plugins/sociable/images/googlebookmark.png" title="Google Bookmarks" alt="Google Bookmarks" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.linkedin.com/shareArticle?mini=true&amp;url=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156&amp;title=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20&amp;source=OptionsHouse+Blog+-+Market+Observations+from+Options+Trading+Experts&amp;summary=Option%20traders%20have%20many%20terms%20for%20what%20is%20essentially%20the%20same%20trade.%C2%A0%20Bull%20call%20spreads%2C%20for%20example%2C%20are%20also%20known%20as%20debit%20call%20spreads%20or%20call%20verticals.%C2%A0%20This%20is%20confusing%20enough%20when%20it%20is%20the%20just%20same%20trade%20verbalized%20three%20different%20ways" title="LinkedIn"><img src="/wp-content/plugins/sociable/images/linkedin.png" title="LinkedIn" alt="LinkedIn" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="/blog/feed" title="RSS"><img src="/wp-content/plugins/sociable/images/rss.png" title="RSS" alt="RSS" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.stumbleupon.com/submit?url=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156&amp;title=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20" title="StumbleUpon"><img src="/wp-content/plugins/sociable/images/stumbleupon.png" title="StumbleUpon" alt="StumbleUpon" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="mailto:?subject=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20&amp;body=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156" title="email"><img src="/wp-content/plugins/sociable/images/email_link.png" title="email" alt="email" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.mixx.com/submit?page_url=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156&amp;title=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20" title="Mixx"><img src="/wp-content/plugins/sociable/images/mixx.png" title="Mixx" alt="Mixx" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://tipd.com/submit.php?url=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156" title="Tipd"><img src="/wp-content/plugins/sociable/images/tipd.png" title="Tipd" alt="Tipd" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.tumblr.com/share?v=3&amp;u=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156&amp;t=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20&amp;s=Option%20traders%20have%20many%20terms%20for%20what%20is%20essentially%20the%20same%20trade.%C2%A0%20Bull%20call%20spreads%2C%20for%20example%2C%20are%20also%20known%20as%20debit%20call%20spreads%20or%20call%20verticals.%C2%A0%20This%20is%20confusing%20enough%20when%20it%20is%20the%20just%20same%20trade%20verbalized%20three%20different%20ways" title="Tumblr"><img src="/wp-content/plugins/sociable/images/tumblr.png" title="Tumblr" alt="Tumblr" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://twitter.com/home?status=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20%20-%20%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156" title="Twitter"><img src="/wp-content/plugins/sociable/images/twitter.png" title="Twitter" alt="Twitter" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://buzz.yahoo.com/submit/?submitUrl=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156&amp;submitHeadline=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20&amp;submitSummary=Option%20traders%20have%20many%20terms%20for%20what%20is%20essentially%20the%20same%20trade.%C2%A0%20Bull%20call%20spreads%2C%20for%20example%2C%20are%20also%20known%20as%20debit%20call%20spreads%20or%20call%20verticals.%C2%A0%20This%20is%20confusing%20enough%20when%20it%20is%20the%20just%20same%20trade%20verbalized%20three%20different%20ways&amp;submitCategory=science&amp;submitAssetType=text" title="Yahoo! Buzz"><img src="/wp-content/plugins/sociable/images/yahoobuzz.png" title="Yahoo! Buzz" alt="Yahoo! Buzz" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://www.friendfeed.com/share?title=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20&amp;link=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156" title="FriendFeed"><img src="/wp-content/plugins/sociable/images/friendfeed.png" title="FriendFeed" alt="FriendFeed" class="sociable-hovers" /></a> 
	<a rel="nofollow" target="_blank" href="http://reddit.com/submit?url=%2Fblog%2Fdebit-spreads-and-credit-spreads-same-risk-different-name-156&amp;title=Debit%20Spreads%20and%20Credit%20Spreads%3A%20Same%20Risk%2C%20Different%20Name%20" title="Reddit"><img src="/wp-content/plugins/sociable/images/reddit.png" title="Reddit" alt="Reddit" class="sociable-hovers" /></a>
 
Related posts:
<ol>
<li><a href='/blog/risk-viewer-its-whats-for-breakfast-213' rel='bookmark' title='Permanent Link: Risk Viewer: It’s What’s for Breakfast'>Risk Viewer: It’s What’s for Breakfast</a></li>
<li><a href='/blog/virtual-trading-practice-on-a-real-trading-platform-without-the-risk-405' rel='bookmark' title='Permanent Link: Virtual Trading: Practice on a Real Trading Platform Without the Risk'>Virtual Trading: Practice on a Real Trading Platform Without the Risk</a></li>
<li><a href='/blog/cramer-calls-bank-of-america-nysebac-a-buy-273' rel='bookmark' title='Permanent Link: Cramer calls Bank of America (NYSE:BAC) a buy'>Cramer calls Bank of America (NYSE:BAC) a buy</a></li>
</ol>

Debit Spreads and Credit Spreads: Same Risk, Different Name

<a href="https://investorplace.com">InvestorPlace - Stock Market News, Stock Advice &amp; Trading Tips</a>
With governments around the world <a href="https://unece.org/hydrogen">continuing to push for greener energy</a> solutions, new environmental technology opportunities emerge every day. Markets such as electric vehicles, natural gas, solar, wind, and hydrogen energy are all seeing continued growth. Of course, not all sectors of clean energy are progressing at the same rate. In the case of hydrogen, current infrastructure and harvesting hurdles have resulted in <a href="https://elmelin.com/why-are-we-still-not-seeing-hydrogen-cars-on-our-roads/#:~:text=There%20is%20a%20severe%20lack,owning%20a%20hydrogen%20fuel%20car.">slower growth</a> than in other green energy sectors.



Regardless, several reputable companies are investing significant capital to discover the potential of hydrogen as a clean fuel alternative. Investors have the opportunity to get in on a budding and relatively underdeveloped market.&nbsp;



While investing in <a href="https://www.sciencedirect.com/science/article/abs/pii/S0148296319301547">emerging markets should be approached cautiously</a>, hydrogen still has several relevant applications in case of a crisis. For those looking for strong buy <a href="https://investorplace.com/industries/energy/renewable-energy/hydrogen/">hydrogen stocks</a>, these three companies currently show promise and strong financial projections.



<h2>Linde (LIN)</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2022/04/lin_linde_1600-300x169.png" alt="Logo of Linde AG (LIN) in Hanover, Germany - The Linde Group is a multinational chemical company"><div>Source: nitpicker / Shutterstock.com</div></div>Currently, Linde (NASDAQ:<a href="https://investorplace.com/stock-quotes/lin-stock-quote/">LIN</a>) stands as the lone company <a href="https://www.linde-engineering.com/en/hydrogen/index.html">capable of covering every step in the hydrogen value chain</a>. From production to processing, and distribution as well as storage, the company does it all. This commitment to vertical integration makes Linde, one of those strong buy hydrogen stocks that investors simply cannot pass up.



Furthermore, the <a href="https://pitchbook.com/profiles/company/233859-52#overview">company&rsquo;s proven expertise</a> in the elemental chemicals industry means it has significant resources to lean on. For investors this this also provides a second layer of stability when investing in Linde. That&rsquo;s because the company&rsquo;s revenue centers are well diversified amongst different critical industries, such as agriculture and energy production.



Investors should also keep an eye on <a href="https://www.linde-engineering.com/en/news_and_media/press_releases/news20240207.html">Linde&rsquo;s current ventures with Daimler Trucks </a>to develop liquid hydrogen refueling technology for large vehicles. As such LIN serves as one of the stocks with the greatest potential for the future of the hydrogen market.



<h2>Bloom Energy (BE)</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2021/06/shutterstock_1473297014-5-300x169.jpg" alt="BE stock Bloom Energy logo on a building"><div>Source: Sundry Photography / Shutterstock</div></div>Further underscoring the value of its hydrogen electrolysis technologies, Bloom Energy (NYSE:<a href="https://investorplace.com/stock-quotes/be-stock-quote/">BE</a>) recently entered a <a href="https://www.offshore-energy.biz/shell-and-bloom-energy-forge-hydrogen-alliance/">research agreement with petroleum giant Shell</a>. By expanding the environmental viability of hydrogen production, Bloom Energy directly invests in resolving a huge hurdle to widespread adoption.



That&rsquo;s because even though using hydrogen as a fuel does not result in carbon emissions producing it does. Moreover, Bloom Energy currently holds the largest operating electrolysis manufacturing capacity. Thus, its focus on making improvements to omissions will be felt across the hydrogen industry.



Another promising detail, the company reported a <a href="https://newsroom.bloomenergy.com/news/bloom-energy-reports-fourth-quarter-and-full-year-2023-financial-results-with-record-full-year-revenues">record revenue of $1.3 billion</a> in 2023. This improvement in revenue was thanks to its continued growth in product and service revenues. Pair this with a relatively low entry price of around $10 and it starts to sound even more attractive. For investors, this means BE represents one of the best opportunities among strong buy hydrogen stocks.



<h2>ITM Power (ITM)</h2>



<div><img width="300" height="169" src="https://investorplace.com/wp-content/uploads/2022/09/hydrogen-silos-300x169.png" alt="An image of hydrogen fuel silos standing against a blue sky"><div>Source: Audio und werbung / Shutterstock</div></div>Recent news has seen a new push for hydrogen and electrical energy integration in ITM Power&rsquo;s (OTCMKTS:<a href="https://investorplace.com/stock-quotes/itm-stock-quote/">ITM</a>) product offerings. Currently, the company is experimenting with integrating a standard power supply unit design with its <a href="https://itm-power.com/news/itm-power-announces-strategic-collaboration-with-friem">2MW electrolysis containers</a>. Should ITM Power succeed, it will be able to increase the hydrogen electrolysis system&rsquo;s reliability while lowering costs.



With a commitment to this increased efficiency, ITM positions itself as a more affordable alternative for hydrogen production and storage. While the company has struggled in the past with managing its financials, <a href="https://www.investorschronicle.co.uk/news/2024/01/31/hydrogen-company-itm-power-s-turnaround-plan-starts-to-deliver/">recent reports show promising costs and productivity.</a>



Furthermore, though the company is recovering from a price correction, the new Inflation Reduction Act provides opportunities for a comeback. For ITM, the key to returning to the strong price it once commanded will be in capturing budding opportunities. Savvy investors keep an eye on this one, as it has recently been upgraded to moderate buy from most analysts.



On the date of publication, Viktor Zarev&nbsp;did not have (either directly or indirectly) any positions in the securities mentioned in this article.&nbsp;The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com&nbsp;<a href="https://investorplace.com/corporate/investorplace-publishing-guidelines/" target="_blank">Publishing Guidelines</a>.
<div>Viktor Zarev is a scientist, researcher, and writer specializing in explaining the complex world of technology stocks through dedication to accuracy and understanding.</div><h3>More From InvestorPlace</h3>
		<ul><li>
						<a href="https://investorplace.com/2023/10/no-1-ai-investment-might-be-this-company-youve-never-heard-of/?cid=MKT764787&amp;eid=MKT793992">The #1 AI Investment Might Be This Company You&rsquo;ve Never Heard Of</a>
					</li>
																<li>
						<a href="https://investorplace.com/2024/02/wall-street-legend-issues-urgent-ai-code-red/?cid=MKT781156&amp;eid=MKT793990">&ldquo;America&rsquo;s Top Trader&rdquo; Issues A.I. Code Red: Act Now or Miss Out</a>
					</li>
																<li>
						<a href="https://investorplace.com/2021/01/one-percenter-issues-urgent-warning/?cid=MKT499868&amp;eid=MKT793999">It doesn&rsquo;t matter if you have $500 or $5 million. Do this now.</a>
					</li>
									</ul><div>
			<div></div>
						<div></div>
					</div>
	
The post <a href="https://investorplace.com/2024/03/wall-street-favorites-3-hydrogen-stocks-with-strong-buy-ratings-for-march-2024/">Wall Street Favorites: 3 Hydrogen Stocks with Strong Buy Ratings for March 2024</a> appeared first on <a href="https://investorplace.com">InvestorPlace</a>.