If stock-market forecasts exist that necromancy seems like a respectable profession, then political polluters can only prove to certain old maxims that the figures are lies and false figures.
Despite his widespread belief that former Vice President Joe Biden would sack President Donald Trump in a landslide, the election results are still unclear, leaving the world in a state of suspended animation from the outcome.
The race is so close that a clear winner is still unclear, and votes were still being counted on Thursday. Trump, who is trailing Biden’s electoral college votes, tweeted that Democrats are trying to steal the election, as votes were being counted after the vote was closed. Biden has urged voters to be patient until all votes are counted.
The uncertainty of the result does not disturb the financial markets. Stocks have increased throughout the week, and there has been a large decline in the inherent volatility of put and call options on stocks. The action reveals gridlock and laxity in Washington. Regardless of whoever wins the White House, a Republican-controlled Senate mutes, if not zero, any dramatic change in the tax code that is likely to hurt wealthy Americans and corporations.
Given that the stock market would be a quick step in reaction to election news, regardless of the outcome, we advised investors to focus on buying stocks by selling cash-safe put options to exploit the stock’s decline. Want to do it myself. We also recommended a risk-reversal strategy – the same expiration when selling a put and buying a call with a higher strike price –
S&P 500 Index,
Which would make investors agree to buy the shares if the market saw a fall in electoral news, while the stock would make profits when it advanced.
Both approaches have worked well – and still make sense in between.
Because it is difficult to have an informative advantage amidst political chaos, investors who can handle volatility and those who have a longer horizon may find some interesting opportunities – especially in stocks that have recently been undervalued – including
Alibaba group holding
(BABA), and even like major technology stocks
com (AMZN), and
Consider Alibaba, since its initial public offering in 2014, we have joined this column. Earlier in the week, the Chinese government surprisingly canceled Ant Group’s IPO, of which Alibaba still owns a significant stake. Alibaba’s stock was adjusted as expected by investors.
The idea of the Communist Party of China is harder to understand than American politics, but it is a fact: the continued rise of China’s middle class is a serious economic phenomenon. Alibaba is an important way for investors to monetize the thesis, and any weakness in the stock is enticing.
With Alibaba’s US-listed stock around $ 285, investors can sell the December $ 285 put and buy the December $ 290 call. By reversing the risk, investors pay $ 2.40 to buy the stock for $ 285 and participate in rallies above $ 290. The expiration covers Alibaba’s November 11 day sale event.
Alibaba posted strong earnings early Thursday, although the stock was submerged on the news. Its price is likely to remain volatile, so be prepared to adjust the strike price as needed. The weakness of the stock is stimulating.
During the last 52 weeks, Alibaba’s stock has increased from $ 169.95 to $ 319.32. The stock has risen 35% this year, and is up 53% from the previous year.
There’s no way around it: the aborted ant IPO — perhaps the delay in dealing with the new rules — is disappointing. However, we are aware that currently the risks of government intervention are increased, even though Alibaba is well positioned to benefit from the growing middle class.
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