Blog Posts

Magical Formula Investing is a financial market strategy developed by Joel Greenblatt, a well-respected finance professor and fund manager. This method combines two key financial metrics: earnings yield and return on capital The goal is to systematically identify high-quality companies at bargain prices. We’ll look at the approach and also distill how day traders and […]

Trading offers the potential for financial gains and an intriguing, relatively autonomous career. But before diving in, one needs initial capital, commonly known as a bankroll. Building and managing this initial investment is the foundation of long-term trading success.   Key Takeaways – How To Develop a Bankroll for Trading Foundation for Success – Building and […]

In options trading, synthetic positions offer traders flexibility and the opportunity to mimic the outcomes of traditional stock trading strategies using a combination of options contracts.  Essentially, synthetic long and synthetic short strategies let traders simulate the risk and reward profiles of buying or shorting a stock, respectively, without actually owning or borrowing the underlying […]

Portfolio margin is a method of determining margin requirements that brokers use to evaluate the overall risk of a client’s portfolio. Unlike traditional margin accounts, which typically calculate requirements based solely on individual securities, portfolio margin accounts use a risk-based model. This approach looks at the entire portfolio’s potential for loss in varying market scenarios. […]

The music industry has massive underlying demand and could be of interest for traders or investors looking to get in on a secular trend. YouTube’s most popular videos and most viewed videos ever are disproportionately music videos. The top ones obtain billions of views, garnering popularity that most forms of content could never fathom even […]

Let’s look at some advanced trading strategies. Some of these strategies might not be directly pursuable for most traders – though some are – but they can show the variety of what’s possible, provide awareness, and inspire creativity: Mortgage Basis Trade (Long/Short MBS Pools vs. TBA) This strategy involves taking positions in mortgage-backed securities (MBS) […]

Financial markets are immense but small at the same time. While there are hundreds of thousands of things you can buy, there are really only a few standard asset classes that people look to for yield: cash bonds stocks Things like private assets and real estate will tend to fall in the bonds (credit) or […]

The basis is a trading strategy that tries to exploit the temporary price differences between a futures contract and its underlying asset (e.g., commodities, bonds, stocks). Basis trading belongs to the broader category of arbitrage, convergence, or relative value strategies. Arbitrageurs try to capture small but relatively risk-free profits arising from price discrepancies in related […]

In fixed-income securities – particularly government bonds like US Treasuries – the terms “on-the-run” and “off-the-run” have important implications for traders. On-The-Run (OTR) Bonds – These are the most recently issued Treasury securities of a specific maturity (e.g., a 10-year Treasury note). They’re actively traded and offer the highest liquidity. Off-The-Run (OFFTR) Bonds – These […]

Contango and backwardation convergence strategies try to profit from the natural tendency of futures prices to converge toward the spot price of the underlying asset as the contract nears expiration.    Key Takeaways – Contango & Backwardation Trading Strategies Contango Convergence Strategy: Involves buying the front-month (or front-period) contract and shorting a later-dated contract. Tries […]