You may want to recommend a covered strangle to wary investors as a way to take advantage of current volatility
Worries about a global economic slowdown have caused volatility to rise rapidly, creating opportune conditions for employing some options-based strategies in your clients’ portfolios. The Chicago Board Options Exchange’s volatility index (VIX), for example, closed at 18.76 on Oct. 9, when the Dow Jones industrial average dropped by more than 334 points. The VIX was […]
The decision to employ hedging in a client's portfolio comes down to how best to address a client's emotional baggage
Having recently passed the first anniversary of the launch of mini-options contracts, the time is now ripe to discuss their virtues. That’s because it’s best to wait for a new product to work its way through the system, which gives the market a chance to work out the bugs. The initial launch covered five securities, […]
Investors write options if they believe the implied volatility is too high but buy options when implied volatility is understating future risk
Assessing future volatility helps to determine the appropriate strategy
Will stock markets ever get beyond political headlines and other self-inflicted emergencies? Without conviction, we will continue to see directionless markets propelled by emotion. So far, we have escaped mass hysteria, which explains why there have been no sustained spikes in the Chicago Board Options Exchange’s volatility index. Clearly, the lack of conviction among traders […]
Your clients could end up with a low-cost leveraged play on stocks they want to own while defending those positions against potential volatility
An options strategy for clients seeking to profit from BlackBerry's fragile state
The purchase of a call and a put option on the same underlying security removes concern about the direction of the markets