One of the things that many investors forget, and something that you as a trader should not ever leave your mind, is that one or two strong sectors in a stock market can pull the rest of the market up with it when it sees strong movement coupled with consumer confidence. Over the last decade or so, the leading sector in the United States when looked at in this light is the technology sector. Shining stars like Apple, Microsoft, and Alphabet have been leaders here, with newcomers like Facebook and Netflix hopping on board later, but having similar sway. When the tech market is booming, it often pulls the rest of the marketplace up with it as a result.
That is the case currently as strong data from companies like Apple and Netflix has had a big impact on the rest of the market. Early in the trading day on Monday, October 24th, stocks had moved substantially forward, with the Dow Jones Industrial Average having risen by more than 100 points in less than an hour. That’s a gain of about 0.6 percent in about 45 minutes, for those looking for more precise data. The big reason for this, according to experts in the field, is that tech stocks are performing at stronger than expected levels.
As professional traders and hedge fund managers move quickly to solidify positions in this quickly moving atmosphere, binary options traders are presented with a much more relaxed way to make money. By looking at which areas have overextended themselves here, a few well-timed put options become an easy way to take advantage of the assets that move up too quickly in price. This can easily occur in indices as a whole when gains are pushed up by just a few companies. It can also be a good strategy if individual stocks can be pinpointed that have overstepped their bounds and are in need of a correction. Personal analysis will yield more precise instances for you.
Beware, because some of these gains may actually be warranted. The tech sector is always one that surprises even the most astute of analysts because of how innovative it can be. If you are taking out put options no assets that still have a lot of room for upward growth, you are going to find yourself losing money no matter how observant you’ve been. Be patient and don’t adhere to this strategy if it doesn’t look like it will be helpful in your trades.
There are still many concerns about the AT&T/Time Warner merger, though. AT&T had agreed to purchase Time Warner just a couple days before this trading day, and although it is a huge move, investors are not convinced that it is for the best. While the rest of the stocks were going up, these two stocks were falling in price. AT&T fell by 1.5 percent, and Time Warner dropped by about 2.4 percent over the same timeframe that is cited above. These two companies do not operate strictly in the tech sector as AT&T is a communications company and Time Warner is most heavily settled in the entertainment business, but both do rely heavily upon tech for their growth and success. Investment concerns may just be reactionary in nature at this time, which would indicate that prices would go up in the future, so it is worth taking a look at this proposed merger again in the future. However, it is smart to be cautious because many governmental officials have expressed concerns about monopolization, which could lead to further losses if lawsuits are a possibility. Before you go long looking for profit making opportunities, evaluate the likelihood of this happening.