Please carefully compare your 2011 tax filing with any corrected Form 1099 you may receive and monitor whether the changes would necessitate filing an amendment with the IRS.
If you have filed: Should you receive a corrected Form 1099, please carefully compare your 2011 tax filing with your corrected Form 1099 and monitor whether changes would necessitate filing an amendment with the IRS.
If you have not filed: At this point we are not aware when corrected 1099s will be available. Once available, they will be accessible online. If necessary, you may consider filing for an extension. However, you may first wish to consult with your qualified tax professional before making any final decisions with regard to your personal circumstances. Please remember that the 2011 tax filing deadline is April 17th, 2011.
Which stocks are at risk for really big moves? If I knew that before it happened my life would be a lot easier. That said, the options market can give clues to names that the market perceives will be very volatile. We did not do fundamental research on all the stocks in the universe. Instead, we scan the implied volatilities of all the stocks that have options on them, and we highlight those that have an implied volatility of over 75%. When you have stocks in your portfolio that meet this criteria, we then look at the expected impact of 50% moves. Intuitively, if the market is telling you that the stock is going to be volatile, you should look for bigger moves than we see in the first screening criteria. This will not catch all stocks that make large moves. There are times when stocks with lower implied volatilities are affected by something that causes a very large move.
The risk in your account in symbols with high implied volatility indicates an expectation of the possibility of severe price movement. Looking at a 50% price slide you are at risk of losing [x%] of your account value.
10 = >50%
8 = 50-30%
6 = 30-15%
4 = 15-8%
2 = 8-3%
0 = 3-0%
This tells you how much risk your overall account faces from a 20% move in a single holding. Think about it as checking gap risk for all your names. You should avoid putting your whole account at risk because of one stock. Individual stock risk is very real and you need to be cognizant of the risk in an individual position compared to your entire account. Note if a stock moves more than 20%, you are potentially at risk to lose more value.
With a 20% move up or down in symbol, you are at risk of losing [%] of your current account value.
10 = 50%
8 = 50-31%
6 = 31-16%
4 = 16-9%
2 = 9-3%
0 = 3-0%
This tells you how much risk you have in relation to a 10% beta-adjusted move in the overall market. You may have a very evenly-distributed portfolio across 30 large cap stocks. Not one of those positions alone will put your overall account at risk. However, if you are long all of them, from a beta-adjusted perspective, and there is a market move like we saw in August of 2011, your entire portfolio could be at risk. The stocks may all be correlated and move down in unison.
With a 10% beta-adjusted move in the overall market, you are at risk of losing [%] of your current account value.
10 = >46%
8 = 46-36%
6 = 36-25%
4 = 25-12%
2 = 12-6%
0 = 6-0%
This measures your dollar delta exposure to your account value. It will be somewhat closely tied to the Portfolio Risk Slide, but there are times when these measures differ, so we will give them both to you. This looks at your account’s behavior based on its current dollar delta position compared to the amount of money in your account.
Your account’s current exposure to the market as determined by the dollar delta is [x%] of your current account value.
10 = 1000%
8 = 1000-600%
6 = 600-400%
4 = 400-100%
2 = 100-50%
0 = 50-0%
Another relatively uncommon scenario appears when people are trading boxes that don’t have huge regulatory requirements. Usually when they are trading box spreads (a four-sided option spread that involves a long call and a short put at one strike price as well as a short call and a long put at another strike price) that don’t have huge regulatory requirements. Usually when they are trading boxes there is something causing the value of the box to be over parity. This can happen from the stock being very hard to borrow, a tender offer, or a big dividend. This is an advanced strategy that should not be tried by novices. Even experts should understand when they are too weighted to this.
You have expanded your Portfolio’s Value to [X]x your account value.
10 = 5x
8 = 5-4x
6 = 4-3x
4 = 3-2x
2 = 2-1x
0 = 1-0x
Traders who are long options need to understand how much capital they have at risk from their options portfolio expiring. We look at two measures: 1) out of the money premium expiring within 30 days, and 2) out of the money premium expiring within 60 days. This will let you keep track of how much you would lose if those options expired today. If the options you own are in the money, only the premium in excess of parity counts as a loss. Especially for the guide around premium within 60 days, this is not something that may demand immediate attention today. However, high scores in this scenario should alert you that you may want to close some of these expiring options positions or roll them out to longer dated positions in the near future. Traders sometimes mistake the limited liability of being long options as indicating “not much risk.” If you own too many of these in relation to your account value, you actually could lose the whole thing.
With 30 days left until expiration if the market doesn’t move materially before expiration, your long out-of-the-money options may expire worthless. These options represent [%] of your account value.
10 = >50%
8 = 50-35%
6 = 35-20%
4 = 20-10%
2 = 10-5%
0 = 5-0%
With 60 days left until expiration if the market doesn’t move materially before expiration, your long out-of-the-money options may expire worthless. These options represent [%] of your account value.
10 = >75%
8 = 75%-60%
6 = 60-40%
4 = 40-25%
2 = 25-10%
