Friday, August 3, 2012

Friday's Best Of The Web 8/3/12 @BookingAlpha @TradersBase @themoneygame

Today's first article comes from a good Twitter friend of mine, @BookingAlpha.  He runs a blog with a lot of useful free info, but also offers a subscription-based service.

In his article, Book describes how to hedge long calls or puts with debit spreads.  This helps reduce your cost basis for the trade, but also limits your upside somewhat.

"The hedge trade simply sells a short call (or put) against an already long call (or put). The same number of contracts are sold as is already open for the long strike. Selling the short option results in creating a debit spread.
Why do this?
The strategy in play is to hedge the exposure of the funds at risk (the original debit amount of the long strike) by collecting premium for the short strike sold. The collected premium drastically reduces the net debit amount for the resulting spread."

Click the picture to read the full article.

The second article is from Chris Diodato @TradersBase, posted on  Chris also runs his own blog but has posted on SA from time to time.

His SeekingAlpha article describes market sector rotation and takes a look at where we are now.

"As a rule of thumb, in powerful bull markets, money flows into risky sectors, such as small caps, financials, technology, consumer discretionary, and transports. These sectors lead. Near market tops, one will find energy, materials, and industrials usually leading. Then finally, as the economy begins contracting, and the bear market begins, the leading sectors come to be consumer staples, healthcare, and utilities. The cycle occurs over and over again."

Click the picture to read the full article.

The last post comes from @themoneygame who runs a section of the very informative Business Insider website.

It isn't an actual article, but an infograph about how gold is mined and produced.  It's very interesting a worth a look.

Click the picture to see the infograph.

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