It’s impossible to ignore – investors are reaching for risk.
Biotech stocks are catching higher. Copper futures are working on their tenth up-day in a row. Even the Emerging Market HY Bond ETF $EMHY is breaking to 7-month highs as it completes a multi-month base.
And don’t forget about Silver! Gold’s crazy cousin has proven by far the best-performing asset since the US dollar peaked last fall. Strength among these market areas indicates a healthy risk appetite.
I can’t overlook these signs of a constructive bottoming process, especially considering the next chart…
Check out the Emerging Market Bond ETF $EMB relative to the US Treasuries ETF $IEF:
I got a lot of feedback on my last letter where I suggested active traders need to stop trading Covered Call spreads for tactical trades and instead do a simple Naked Puts trade.
Thank you to everyone who engaged.
Anyway, here’s one question [edited to the important parts] I got from a reader where I thought my answer might be instructive to more of you:
Hi Sean,
I read your information on naked puts. When I intend to buy a stock, I would like to sell a put. I just don't know how to go about it. I just don't know where the strike price would be. I understand that I would have to buy the stock at that price (whether it is better or worse than hoped).
If you could give me an example that would help.
Cheers!
This is a great question, but one without a clear-cut answer. Here was my response: