How can I be paying more than what a stock is trading for?

June 30, 2024 No Comments

A: It might seem logical that the last traded price of a security is the price at which it would currently be trading, but this rarely occurs. The market for a security (or its trading price) is based on its bid and ask prices, not

How can I build a trading strategy based on the Aroon indicator?

June 30, 2024 No Comments

A: One of the primary goals of technical market analytics is to identify performance trends in individual securities or indexes. The goal is that buying and selling opportunities can be identified before they are realized, allowing the savvy investor to time the market effectively. The

How can I hedge against rising diesel prices?

June 30, 2024 No Comments

A: In early 2007, the New York Mercantile Exchange announced that traders would be able to buy or sell futures contracts on New York Harbor ultra low sulfur diesel and U.S Gulf Coast ultra low sulfur diesel. These contracts can be used by traders to

Can a stock lose all its value? How would this affect a long or short position?

June 30, 2024 No Comments

A: The answer to the first part of this question is pretty straightforward: Yes, stocks are able to lose all their value in the market. Now, we don’t want to scare you off investing in stocks, or investing in general. However, we would be lying

Can an Option Have a Negative Strike Price?

June 30, 2024 No Comments

A: The simple answer is that, at least when it comes to exchange traded options, an option can’t have a negative strike price. Remember that an option gives the holder the right, but not the obligation, to buy or sell an underlying security at a

Can I make money using put options when prices are going up?

June 30, 2024 No Comments

A: It seems counterintuitive that you would be able to profit from an increase in the price of an underlying asset by using a product that is most often associated with gaining from falling prices. However, as you’ll see with the two methods below, it

Do Stop or Limit Orders Protect You Against Gaps?

June 30, 2024 No Comments

A: Many are hesitant to invest in the stock market because of the large gaps in prices. It is not uncommon to see a stock that closed the previous session at $55 open the next trading day at $40. This kind of volatility can result in massive

Does a negative alpha automatically mean I should sell?

June 30, 2024 No Comments

A: Investors and analysts use numerous technical indicators to assess the relative risk associated with a given stock. Optimal risk management involves assessing an investment’s risk and profitability potential from all angles, including its performance relative to that of the broader market. Consistent underperformance may

Does the seller (the writer) of an option determine the details of the option contract?

June 30, 2024 No Comments

A: The quick answer is yes and no. It all depends on where the option is traded. An option contract is an agreement between the buyer and the seller of the contract to buy or sell an underlying asset at a certain price, amount and

Are Stocks With Large Daily Volume Less Volatile?

June 30, 2024 No Comments

A: Stock volatility refers to a drastic decrease or increase in value experienced by a given stock within a given period. There is a relationship between the volume of a traded stock and its volatility. When a stock is purchased in large quantities, the stock

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