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Options Trader
Basic Strategies for Big Profits in Any Market
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The three leading indexes again made a run at new highs last week as the S&P 500 gained 1.75%, the Dow rallied 0.7% and the Nasdaq added 2.88%.
2024 got off to a somewhat rocky start as the S&P 500 fell 1.8%, the Dow lost 0.6% and the Nasdaq lost 3.5%. And while the indexes fell there is rarely much to learn from the first week of the year as this week is often “wonky” as traders rotate from one sector to the next, and tax-related trading can move money out of recent winners.
Despite an ugly day for the market on Wednesday, the buyers again bought the dip, and as of the close Friday, the S&P 500 is now approximately 1% from all-time highs. For the week, the S&P 500 gained 0.57%, and the Dow and Nasdaq rallied approximately 0.2%.
With the Federal Reserve signaling that the interest rate hiking cycle is over, and there may even be rate cuts in 2024 the bulls cheered this news as the S&P 500 gained 2.5%, the Dow rallied 2.9%, and the Nasdaq added 2.85%.
Despite some early-in-the-week wobbles, the bulls were able to rally into the close of the week and again tack on gains. For the week the S&P 500 gained 0.8%, the Dow was unchanged, and the Nasdaq rose by 0.7%.
The bulls once again pushed the market higher last week as the S&P 500 gained 0.77%, the Dow was the big winner with a rally of 2.42%, and the Nasdaq rose marginally by 0.38%.
Before we dive into this morning’s Weekly Review, I wanted to bring to your attention to the schedule for this holiday week. I will be working/trading as normal Monday through Wednesday, and then will be off Thursday through Monday morning, which means we won’t be sending a Daily Watchlist or the Week in Review on Monday, November 27. Have a great Thanksgiving!
While the market slid on Thursday, which put the recent rally in question, the bulls took the opportunity to buy that dip in a big way on Friday. When it was all said and done it was another strong week for the market as the S&P 500 gained 1.3%, the Dow rallied 0.65%, and the Nasdaq added 2.3%.
How quickly the market can change directions as one week we are on the verge of a steep decline, and the next week the indexes explode higher. This last week fell into the big winner camp as the S&P 500 gained 5.35%, the Dow rallied 5.07% and the Nasdaq added 6.61%.
There is no sugar coating it, the market had a very bad week as the S&P 500 fell 2.5%, the Dow lost 2.14% and the Nasdaq declined by 2.6%.
The historic move in the bond market continued to weigh on stocks last week as the S&P 500 lost 2.4%, the Dow fell 1.6% and the Nasdaq declined by 3.1%.
Not surprisingly this past week had many ups and downs, as the market responded well to bad news early in the week and then gave up some of those gains on Friday. By week’s end the S&P 500 had gained 0.46%, the Dow had risen by 0.79% and the Nasdaq had fallen marginally.
Recent Alerts
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.
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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
As the market was falling apart and the VIX was exploding to multi-year highs, Cabot Options Trader Pro subscribers executed a short volatility trade, selling an Iron Condor. Here are the details of the trade and some of my commentary.
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I’m often asked about the difference between Cabot Options Trader and Cabot Options Trader Pro, so here I explain the difference so that you can choose the right service for your needs.
As the market was again making new highs yesterday afternoon, I received a question from a reader asking about how I handle winning trades. It’s a great subject.
I received a great question this afternoon that I thought I would share with all my subscribers. The reader’s question was regarding the buyer of 30,000 October 40 Calls, and my writing that the trader needs the stock to rally $5.50 in the next 24 days to break even on the trade.
Jacob explains how insurance stocks’ behavior when a hurricane is approaching and after it has past is similar to how earnings or drug announcements can cause big moves in other stocks.
A bull risk reversal trade brought Hewlett Packard Enterprises (HPE) to Jacob’s attention back in June. Bull risk reversals are a favorite tool for hedge funds and are just about the most bullish trade you can execute using options because both components of the trade are bullish.
As the Nasdaq has fallen by approximately 5% in the last several weeks, and many stocks have fallen by much more, I’ve received many emails about how to play these stocks. For example, “Jacob, how would you recommend getting long XYZ at these depressed levels?”
Oftentimes after making a buy-write recommendation, I get questions on how I choose the strike to sell. So I thought I would go through my thought process with this trade.
Today I want to share with you the story of my greatest trade. And it was pure luck!
Not many people outside of my old company know about this trade—it’s the greatest trade I ever witnessed.
As a trader on the Chicago Board of Options Exchange (CBOE) for more than 10 years, I witnessed and heard many unbelievable trading stories.