TSC Options Forum: An Effective January
The column on the January Effect triggered a wide range of questions. Even though the window of opportunity is closing, we still have a few days left to explore the best way to take advantage of the seasonal rally in small-cap stocks.
Steve, Do the iShares have a Web site, or do you have a link to a Web site for all their ETFs? Does one exist?
--T.S.Because the article suggested buying calls on the Russell 2000 iShares (IWM), understanding the concept, construction and offerings of the exchange traded funds known as iShares seems like a great place to start. By going to the Barclay's iShares Web site you can learn all about their products and myriad offerings, some 98 at last count, including broad-based indices, narrow sector and foreign, and bond-based funds. For example, you might decide that buying the iShares Russell 2000 Growth Index Fund (IWO) or its options offers a better opportunity than the iShares Russell 2000 Value Index Fund (IWN). (This is probably a good time to remind everyone to be very careful and double-check all ticker symbols before entering an order. Make sure you understand what you are trading, and that what you are trading is what you intended on trading. Is that clear?) Steve, [I saw a quote that read ] IWT JAN 107 CALL Dec 24 close: 4.20-4.60 Last 3.60 Vol: 0 Open interest: 2351. What does open interest mean? Any reason why this particular call has not traded over the last couple of days? -- G Regarding open interest, let me quote myself from a previous article. "Open interest reflects all transactions, spreads or otherwise. There's no distinction between a sale and purchase because both are needed to consummate a trade. Unlike stocks, which have a finite number of shares available, option open interest is unlimited. It's also a zero-sum game (also unlike stocks, where the overall value can rise or fall as the share price and market cap changes) in which the dollar amounts net out at expiration -- some people win, some lose.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV