“In today’s uncertain market environment, everybody would want to put certainty back in their investment portfolio. You can’t get more certainty than U.S. Treasuries and exchange-traded options to deliver the peace of mind we all want.” The truth is that nobody knows what the market will do, so let’s do this. Invest most of our portfolio in one-year U.S. Treasury Bills and use the future interest today to buy index options giving…
IPS In The News
Should You Buy the Dip?
Should You Buy The Dip? What everybody wants to know Is this a good time to buy the dip, hold your current positions, or go to cash? I’ve been in this business for over 30 years, and I have learned some tough lessons: Market timing is a fool’s game. People confuse being lucky for being good. Buying and holding for the long term is a strategy that, near retirement, can…
Hedging Oil Volatility
Facebook Twitter Youtube West Texas Intermediate crude is up more than 60% in 2021 recently breaking the 2014 high. Many traders are speculating that with ESG investments hitting 1.65 trillion in 2020 and the Covid-19 pandemic many companies have reduced their CAPEX. Unfortunately, these lower CAPEX levels appear to be insufficient to deliver the volumes of oil and gas needed to maintain market stability****. This underinvestment in new exploration according…
What Makes a Great Financial Plan?
I have found over my 30 + years in the financial community that most financial plans are very plain vanilla templates. Yes, all financial plans contain the six tenants of Tax Planning, Insurance Planning, Retirement Planning, Estate Planning, Cash Flow Planning, and Investment Planning. Most planners have their views like should you buy whole life universal or term insurance? Are annuities better than mutual funds? Should you hold your assets…
The Best Looking Horse in the Glue Factory
A mantra being spun by the mainstream media is that, “The Democrats will print money wildly causing the dollar to crash, causing hyper-inflation which will put the market into a tailspin not seen since 1922”. Since the election, I have gotten a number of calls from clients concerned about the echoes of a 1922 Weimar Germany happening in the U.S. This is everyone’s favorite hyperinflation proxy because it happened in…
Is Herd Mentality Driving Commodity Hedging?
I recently read an article detailing how European airlines lost $4.66 Billion* last year through poorly managed fuel hedges. As a hedging practitioner who teaches commodity and financial markets hedging at the University of Colorado in Denver, I found this to be a textbook example for explaining to my students why the hedges used by many companies are poorly placed and potentially dangerous. If the hedge used by the European…
The Short-Volatility Trade Is Now So Big It’s Starting to Break
As Featured in Bloomberg Markets By Luke Kawa and Yakob Peterseil – Bloomberg Markets – October 22, 2019,6:02 AM MDT – featuring Dominick Paoloni, IPS CIO & Founder, IPSAX Portfolio Manager & Patrick Hennessy, Head Trader, IPS Strategic Capital – One of the hottest strategies of the bull market for stocks may be getting too popular for its own good, placing billions of dollars and a slew of money managers at…
Is It Time To Reconsider Short Vol?
As Published In Dominick Paoloni, CIMA® CIO & Founder Portfolio Manager, IPSAX By Elinor Comlay Global risks are rising, the Cboe’s Volatility Index is whipsawing and yet selling options is still more popular than buying. For sure, buying options means managing carry costs. But as the ongoing popularity of short vol strategies and the weight of options selling contributes to compression of the volatility risk premium, it could be time…
Is Selling Options Still Worth the Risk?
Patrick Hennessy, CMT Head Trader I learned a long time ago as a young broker on Wall Street that when looking at a potential trade if the numbers look good, buy the position. Conversely, if the numbers look bad, take the other side of the trade. The popularity of exchange-traded options has exploded in recent years in the investment community. Billions of dollars have been allocated to options-based strategies…
Stock Turmoil Sparks a Wall Street Hunt for Cheap Hedges
By Joanna Ossinger – Bloomberg Markets – August 14, 2019, 7:43 AM MDT Updated on August 14, 2019, 4:45 PM MDT – featuring Patrick Hennessy, Head Trader, IPS Strategic Capital – The bad news for investors who waited this long to buy equity hedges is they’ve become eye-wateringly expensive. The good news is Wall Street thinks there are a few cheap strategies left. A gauge tracking the price of bearish S&P…
The Liquidity ‘Illusion’ Has These Funds Making Plans for a Stock Doomsday
By Cecile Gutscher and Yakob Peterseil By Cecile Gutscher and Yakob Peterseil – Bloomberg Markets – April 10, 2019, 10:11 AM MDT – featuring Dominick Paoloni, IPS Strategic Capital founder, PM IPSAX – A small band of humans is taking up arms against the rise of the machines. Fund managers who ride big sell-offs in stocks are relishing fresh Wall Street warnings that robots and the like are leaving the bull market more vulnerable…
Is the VIX Being Gamed? A Sudden Swoon Has Traders Talking Again
by Nikolaj Gammeltoft and Cecile VannucciJanuary 10, 2018, 4:00 AM MSTClick Here to read on Bloomberg’s website. It made for quite a chart. On the morning of Dec. 20, just as billions of dollars of futures tied to the Cboe Volatility Index were set to expire, the index plunged. The result was a settlement price, a weekly value critical to holders of some the most heavily traded derivatives in the…
