Those betting against this “absurdly overvalued” stock market are about to get paid, if Kevin Smith, Crescat Capital’s chief investment officer, has it right… China kept its benchmark lending rate unchanged on Monday, with the 1-year loan prime rate left at 3.85%. The 5-year loan prime rate was also kept steady at 4.65%. New options traders are having a field day in this market, but these options trading strategies can help you turn pro…
Those betting against this “absurdly overvalued” stock market are about to get paid, if Kevin Smith, Crescat Capital’s chief investment officer, has it right in his gloomy assessment. See full story.
Donald Trump’s big campaign rally in Tulsa wasn’t quite as big as promised, with the man leading the president’s re-election efforts blaming the no-shows. But there was apparently something else at work. See full story.
States like Arizona, Florida and Texas have seen record jumps in daily cases of coronavirus but have not mandated citizens to wear masks in public. See full story.
The Green Bay Packers legend Brett Favre wades into the Colin Kaepernick debate. See full story.
Financial advisers weigh in on the personal finance guru’s latest warning about individual retirement accounts, and how to use them. See full story.
Men and women have different styles of investing — and they can learn from each other. See full story.
Asia stocks mixed as virus cases stateside surge again; China keeps benchmark lending rate unchanged
Stocks in Asia traded mixed on Monday as the number of coronavirus cases stateside soared again.
In Japan, the Nikkei 225 closed 0.18% lower at 22,437.27 while the Topix index ended its trading day 0.23% lower at 1,579.09. South Korea’s Kospi closed 0.68% lower at 2,126.73.
Hong Kong’s Hang Seng index dipped 0.75%, as of their final hour of trading, with shares of Chinese tech giant Alibaba dropping more than 2%. Mainland Chinese stocks were mixed on the day. The Shanghai composite dipped slightly to about 2,965.27 while the Shenzhen component added 0.294% to around 11,702.44.
Over in Australia, the S&P/ASX 200 closed above the flatline at 5,944.50.
Overall, the MSCI Asia ex-Japan index slid 0.18%.
Investors watched for market reaction to the rising number of coronavirus cases in the U.S., with more than 30,000 new infections reported on Friday and Saturday — the highest daily totals since May 1 — according to data compiled by Johns Hopkins University.
Meanwhile, an official said Sunday that the Chinese capital of Beijing is capable of screening almost 1 million people a day for the coronavirus, according to Reuters. That development came on the back of a recent cluster of infections that was found in the city.
“The world is, and accordingly markets are, grappling with conflict and caution. At every level this resonates as much as it rattles,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a note.
“From the conflict between celebrating ‘peak COVID’ as well as ‘exit from lockdowns’ and the real and present dangers of “second wave” infections risks, there must be some degree of caution,” Varathan said.
China kept its benchmark lending rate unchanged on Monday, with the 1-year loan prime rate left at 3.85%. The 5-year loan prime rate was also kept steady at 4.65%.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 97.488 after rising from levels below 96.8 last week.
The Japanese yen traded at 106.93 per dollar after seeing levels above 107.4 in the previous week. The Australian dollar changed hands at $0.6861 following its slide from levels above $0.693 last week.
Oil prices were mixed in the afternoon of Asian trading hours, with international benchmark Brent crude futures up 0.17% at $42.26 per barrel. U.S. crude futures dipped 0.55% to $39.53 per barrel.
Author: Eustance Huang
Options 101: How to Make Money Trading Options on Robinhood
Robinhood has been in the news crosshairs over the last few weeks. Its commission-free trading and easy access to options trading has made it the go-to home of new traders. And some pundits are now complaining that these traders are distorting the market.
We believe that’s nothing more than sour grapes from Wall Street, who missed the supercharged rally since stocks bottomed in March.
But we also don’t want Robinhood traders to miss out on serious gains or take on too much risk, either. In fact, we’re here to help you take your trading to the next level.
Maybe you’ve read about how much money options traders can make but you just didn’t know how to do it. Or if you’ve tried your hand at it, maybe you haven’t had much luck yet. The good news is that all you need is a mentor, and that’s what we here at Money Morning can do for you.
What you need first is a solid foundation in what options are and how they work. Don’t worry, you don’t need to learn the same rocket science stuff that the professionals use. You don’t have to compete with them, either.
All you really need to do is take small bites out of the market. And do it over and over again.
By now, you are probably familiar with calls and puts and how they work. But there’s more to making successful options trades than predicting which direction the stock will move. That’s a big part of it, to be sure, but it’s easy to get caught chasing gains. Just ask any trader who had a bullish position on when the Dow plunged 7% in one day the week before last.
Options 101: It’s never been easier to learn how to trade options, especially with our free guide from top trading expert Tom Gentile. Click here to get it.
What you need are some guiding principles, some rules to keep you disciplined and on the path to profits.
And that’s exactly what we’ve got for you today.
These are the seven rules you can start following right now to instantly improve your trading and protect against the risk of a volatile market.
Check them out…
1 – Make sure you only trade liquid options. That means options that have some volume behind them. You don’t want to buy a call, watch the stock go up, and then be unable to sell that option into an empty marketplace. Remember, any asset is worth zero if nobody else wants to buy it.
To make sure your prospective option is liquid, look at the bid-ask spread. If the spread is just a few pennies apart, then it’s likely a liquid trade. If the spread is a wide range, you’re likely to overpay and have no one to sell to.
2 – Spread your risk. You should only risk a small percentage of your trading capital on any one trade, no matter how sure you are about it. Don’t forget that trading is not a guarantee, and you will lose money from time to time. The idea is not to “blow up” your trading account with huge losses, especially several in a row.
The beauty of options is that they have a lower cost than buying the stock outright, while giving you a much higher chance of growth. But you torpedo this benefit if you pour all of your money into one trade. Keep your costs down and your risk low, and your profits will more than make up for the losses.
3 – Understand how much you can realistically make vs. how much you can lose. It is a simple risk vs. reward exercise. There are many online options calculators to help you, but there are two factors to keep in mind. The longer the option has to expiration, the more “time value” it will have. And the higher the stock trades above the option strike price, the more “intrinsic value” the option will have. Time value plus intrinsic value = traded price (theoretically). Don’t forget, a call option at expiration is worth nothing if the stock is at or below the option strike price.
So before buying an option, make sure you’re comfortable with how long you have for the stock to move in your direction AND for you to sell it before expiration.
4 – Risk control. If it becomes clear that the trade is not working, cut your losses. Live to trade again another time, and do not ride any trade down to zero.
Investing is different than trading. If you want to invest in a company, you’ll ride out the bad times. But a trade is different. If breaking news on the company goes against you, get out while you still can. Chances are the stock won’t recover quickly enough.
5 – Leave your emotions at the door. You may love a stock, and that stock may be in a rip-roaring rally, but at some point, the risk/reward ratio is no longer favorable. Do not chase any trade. There will be others.
To have our experts deliver trades right to your inbox, make sure you check this out.
6 – Take it easy. If you are successful, keep a cool head and do not overdo it. And if you run into a streak of bad luck, take a breather. Clear your head and look for better opportunities. There is no law that says you have to trade all the time.
7 – Pull the trigger. Don’t overanalyze and get started!
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Author: Money Morning Staff Reports