Schaeffer's Investment Research On The Fall Election, Unusual Options Activity & Advice For New Traders

The upcoming Benzinga Options Boot Camp, set to take place on August 28, 2020, will feature presentations from a line-up of options-trading experts and investors. Among the line-up is Schaeffer’s Investment Research.

Schaeffer’s Investment Research has been providing stocks and options research for 39 years. Their services include market recommendations, stock options education as well as informative newsletters.

Their product offerings are well-diversified with strategies to meet the needs of most retail options traders. And throughout the company’s near four decades in the industry, they have made the conscious effort to grow with the times. As the years evolved, so did their products. They continually make sure that their products meet the differing needs of their subscriber base and the changes in the options industry. 

This same principle applies to the company’s analysts as well who boast years and years of experience. “But this means nothing if they are not using their knowledge to continue to explore new and better ways in order to stay ahead of the competition.  This is something we demand of our analysts,” said Matthew Timpane, Senior Market Strategist at Schaeffer’s Investment Research.

Timpane will be speaking at the upcoming Benzinga Options Boot Camp to discuss how the fall election could impact the markets and what the company is looking out for that could potentially stop or pause this epic bull market rally.

Unusual Options Activity

In Schaeffer’s observation of the market, Timpane notes that unusual options activity is always occurring and typically varies between “smart money” and “dumb money.”

One situation that Schaffer’s is currently tracking is on Regions Financial Corp RF, where buy (to open) call volume have been unusually high, with the 10-day buy (to open) call/put volume ratio soaring to 300 calls purchased to every put on August 21.  

“The September 13 call contract was the site of the action, and this contract was out of the money at the time of the activity and near the end of August,” said Timpane. “While there is a remote possibility this could be ‘smart money,’ our tendency is to view this situation as bearish, given the poor price action since the eruption of the unusual call activity.”  

As September expiration inches closer, and if Regions Financial remains below the 13 strike, there will a gradual unwind of long positions associated with the September 13 call open interest, as those that sold the calls to the buyers unwind their hedges, he explains.

Advice For New Traders

Timpane’s advice for new options traders just entering the market is to stay away from the allure of trading out-of-the-money options and stick with in-the-money options while you’re learning to trade options. 

“People often make the mistake of buying out-of-the-money options because they are cheap, but they are cheap for a reason. The chances of out-of-the-money contracts finishing in-the-money is far less than at-the-money or options contracts that are already in-the-money. In-the-money options already hold intrinsic value, have a higher probability of finishing in the money, and still give you the leverage factor that you are looking for when starting to trade options.”

Photo by Jonathan Riley on Unsplash