After Monday’s big rally in the stock markets, and yesterday’s news that the United States managed to avert the dreaded “fiscal cliff,” global markets are rallying sharply today.
And it’s when markets rally sharply that options enjoy their biggest gains.
So, today I am recommending that you sell half of your February $43 call options in the iShares MSCI Emerging Markets Index (EEM) for a 66.4% gain and half of your February $40 call options in iShares FTSE China 25 Index Fund (FXI) for a 115.38% gain.
Hold on to both the underlying ETF holdings, ProShares Ultra MSCI Emerging Markets (EET) and ProShares Ultra FTSE China 25 (XPP), as well as your remaining options, for potentially bigger gains in the weeks ahead.
Overall, it was a flat market in the United States with the S&P 500 down 0.03% and the Dow Jones Industrial Average ending the week 0.27% lower. Global markets, however, continued their steady rise with the MCSI Emerging Markets Index jumping 2.71%.
Asian stock markets started the year in positive territory, hitting a five-month high overnight amid optimism surrounding the late-night vote in the House of Representatives to avert the $600 billion in tax rises and spending cuts set to kick in
Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
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Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.
Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers: