With geopolitical tensions boiling, investors may want to consider defense stocks.
Ukraine just launched a massive drone raid on an ammunition facility in Russia. And, according to Kyivpost.com, it “was likely the most damaging long-range attack launched by Kyiv in 30 months of combat, and possibly the most devastating air strike ever to hit Russia.”
Vladimir Putin has also warned it would be at war with the U.S. and allies if it lifts restrictions on Ukraine’s use of long-term Western weapons.
“We are not talking about allowing or not allowing the Ukrainian regime to strike Russia with these weapons,” Putin added, as quoted by NBC News. “We are talking about deciding whether NATO countries are directly involved in the military conflict or not.”
Tensions between Israel and Hezbollah are also boiling over.
All of which could require even more spending on defense.
That being said, investors may want to jump into defense ETFs including:
SPDR S&P Aerospace & Defense ETF (XAR)
The SPDR S&P Aerospace & Defense ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Aerospace & Defense Select Industry Index. Last trading at $154.20, we’d like to see it closer to $170.
Every month nearly all options, both put and call options, expire worthless, meaning that the overwhelming majority of call and put buyers lose money. That must mean that simply reversing that concept and selling options should be highly profitable. But strangely, that is not often the case.
Although the option seller will be successful very often, it will take just one or two losses to wipe him out. When you sell options your gain is limited to the amount you sold the option for, less commission and fees. Your risk, on the other hand, is unlimited. To do this type of trading successfully you must rid yourself of any thoughts that you know where the market is going and find a way to limit your losses. This is the ultimate goal of option premium selling.
To accomplish this goal you must sell premium on both sides of the market and to limit risk you must buy further out options on both sides of the market for protection. By doing this you have now created a credit spread.
Creating a credit spread keeps you out of danger if the market suddenly runs up or down. Your total loss is limited to the difference in strike prices minus the premium received. In other words, if you sold a September 1600 call and bought the 1610 call for protection for a total credit of 250 ticks, your maximum loss would be 1000 ticks (1610 – 1600), less the original credit (250) for a maximum loss of 750 ticks. My objective is to have the September S&P close below 1600 by the time the option expires in September.
Here’s your chance to become a bonafide “Insider” at the wildly popular Top That Trade weekly debate… syndicated on more than 100 TV stations around the world.
Being an “Insider” is not only fun and exciting… it’s empowering!
As a valued Triple-T Insider, every Friday a Top That Trade Insider Briefing will be delivered to your inbox…
With a direct link to the current Top That Trade episode and tantalizing insight you won’t find anywhere else… here are this week’s topics!
PLEASE READ: Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by TradeWins. For additional information on auto-trading, you may visit the SEC’s website: All About Auto-Trading, TradeWins does not recommend or refer subscribers to broker-dealers. You should perform your own due diligence with respect to satisfactory broker-dealers and whether to open a brokerage account. You should always consult with your own professional advisers regarding equities and options on equities trading.
1) The information provided by the newsletters, trading, training and educational products related to various markets (collectively referred to as the “Services”) is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by TradeWins Publishing (“TradeWins”) a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. The Services are intended to supplement your own research and analysis.
2) TradeWins’ Services are not a solicitation or offer to buy or sell any financial products, and the Services are not intended to provide money management advice or services.
3) Past performance is not necessarily indicative of future results. Trading and investing involve substantial risk. Trading on margin carries a high level of risk, and may not be suitable for all investors. Other than the refund policy detailed elsewhere, TradeWins does not make any guarantee or other promise as to any results that may be obtained from using the Services. No person subscribing for the Services (“Subscriber”) should make any investment decision without first consulting his or her own personal financial adviser, broker or consultant. TradeWins disclaims any and all liability in the event anything contained in the Services proves to be inaccurate, incomplete or unreliable, or results in any investment or other loss by a Subscriber.
4) You should trade or invest only “risk capital” – money you can afford to lose. Trading stocks and stock options involves high risk and you can lose the entire principal amount invested or more.
5) All investments carry risk and all trading decisions made by a person remain the responsibility of that person. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses. Subscribers should fully understand all risks associated with any kind of trading or investing before engaging in such activities.
6) Some profit examples are based on hypothetical or simulated trading. This means the trades are not actual trades and instead are hypothetical trades based on real market prices at the time the recommendation is disseminated. No actual money is invested, nor are any trades executed. Hypothetical or simulated performance is not necessarily indicative of future results. Hypothetical performance results have many inherent limitations, some of which are described below. Also, the hypothetical results do not include the costs of subscriptions, commissions, or other fees. Because the trades underlying these examples have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Simulated trading services in general are also designed with the benefit of hindsight, which may not be relevant to actual trading. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. TradeWins makes no representations or warranties that any account will or is likely to achieve profits similar to those shown.
7) No representation is being made that you will achieve profits or the same results as any person providing testimonial. No representation is being made that any person providing a testimonial is likely to continue to experience profitable trading after the date on which the testimonial was provided, and in fact the person providing the testimonial may have experienced losses.
8) The author experiences are not typical. The author is an experienced investor and your results will vary depending on risk tolerance, amount of risk capital utilized, size of trading position and other factors. Certain Subscribers may modify the author methods, or modify or ignore the rules or risk parameters, and any such actions are taken entirely at the Subscriber’s own election and for the Subscriber’s own risk.
If you wish to stop receiving our emails or change your subscription options, please Manage Your Subscription TradeWins Publishing, 528 North Country Rd., St. James, NY 11780
No comments:
Post a Comment