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Options Trader
Basic Strategies for Big Profits in Any Market
The bond market’s wild gyrations were once again front of mind for traders last week, though interestingly by week’s end the market was mostly mixed as the S&P 500 lost 0.75%, the Dow fell 1.34%, and the Nasdaq was virtually unchanged.
It was a somewhat ugly week for the market as the Federal Reserve continued to push its hawkish agenda and the bond market reacted violently. By week’s end the S&P 500 had lost 2.93%, the Dow had fallen 1.89%, and the Nasdaq had declined by 3.62%.
It was a fairly quiet week in terms of the leading indexes’ performance as the S&P 500 fell marginally, the Dow mostly finished the week unchanged, and the Nasdaq fell by 0.4%.

Partially aided by declines in mega-cap technology stocks Apple (AAPL) and Nvidia (NVDA), both of which lost 6% last week, the holiday-shortened week was not particularly kind to the bulls as the S&P 500 fell 1.3%, the Dow lost 0.75%, and the Nasdaq declined by 2% last week.
The market is on course to have a nice week as the S&P 500 is higher by 3%, the Dow is up 1.2% and the Nasdaq tacked on 3% of gains. The VIX is trading at 13, which is lower by 17% on the week, which given the market’s gains is not surprising ahead of a long weekend.
The market had many ups and downs last week, and despite a nasty sell-off on Thursday the indexes closed the week mostly higher. The S&P 500 gained 0.8%, the Dow lost 0.45%, and the Nasdaq rose by 2.26%.
It was another rough week for the bulls as the bond market and China worries continue to weigh on the indexes. By week’s end the S&P 500 and Dow had both lost 2.22%, while the Nasdaq declined by 2.6%.
Stop me if you have heard this before, but inflation data and the moves in the bond market continue to be the major drivers of the market’s moves. And last week traders weren’t thrilled with these inputs as the S&P 500 fell by 1%, the Dow gained 0.5% and the Nasdaq continued its recent weakness with a further decline of 2%.
Last week was the first week in what feels like months that the sellers really took control. And while it was hardly a disaster in terms of the indexes as the S&P 500 fell 1.3%, the Dow lost 1.11% and the Nasdaq declined by 2.85%, the pain was worse in individual stocks, many of which fell hard on earnings.
As earnings season approaches the midway point, and following the Federal Reserve’s announcement of a 25-basis point interest rate hike last week, the market continued its ascent. For the week the S&P 500 gained 1%, the Dow rose by 0.65% and the Nasdaq added 2%.
Sector and index rotation was the name of the game last week as money raced out of tech to end the week and into sectors that had not been participating in the market’s advance recently. That being said, this is not necessarily a bad sign as the S&P 500 gained 0.7%, the Dow rallied 2.08% and the Nasdaq lost 0.6%.
The market surged higher yet again last week, and traders are beginning to wonder if a run at new highs is in the cards in 2023. While there is a way to go until we reach those peaks, last week’s gains of 2.4% for the S&P 500, 2.3% for the Dow, and 3.32% for the Nasdaq gives the bulls hope.
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Options Strategy
Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.
Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.
A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.
Using Options to Hedge a Portfolio

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

This guide will help you execute the options strategies recommended in Cabot Options Trader.
Guide to Options Trading
Options Education
Worried about another market correction? This bit of options education should help you learn how to hedge your portfolio using puts.
Options education is one of my main goals for Cabot Options Trader subscribers. And here are three important lessons I’ve been telling people lately.
Options education is one of my main goals for Cabot Options Trader subscribers. And here are three important lessons I’ve been telling people lately.
In the wake of the second Boeing 737 plane crash Boeing stock, symbol BA, has become extremely volatile and of interest to Cabot Options Traders.
All options are a wasting asset whose time value erodes to zero by expiration. This erosion is known as time decay.
A protective put is used when a trader is bullish on a stock he is buying or already owns, but is wary of the stock’s short-term future. It is used as a means to protect unrealized gains, while giving the trader continued upside potential.
Combining Cabot Options Trader and Cabot Growth Investor
In mid-February I sent an Options Education article highlighting a trade Cabot Options Trader Pro subscribers had just executed. To refresh, this was in the midst of a steep market decline and the VIX was exploding higher.
Below is an article I wrote a couple years ago in response to a subscribers’ question regarding options and option volatility around earnings.
I’ve received a ton of great emails from subscribers over the last couple of days about huge profits this year. I’m thrilled that you are making lots of money. That said, while it’s great that we are making good money, we must remember the risks as well.
The S&P 500 is down 0.5% this morning, though well off the overnight lows (lower by 1.25%) following news that Gary Cohn, President Trump’s top economic advisor, is leaving his position. As the market has heated up, I’ve received many great questions from subscribers.