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
Financial advisors may want to look at index straddles as a strategy to hedge against volatility in clients’ portfolios in the weeks ahead. That’s because volatility is short-term noise driven by shifts in investor sentiment. And typically during earnings season, clients focus on micro-fundamentals, such as price to earnings, forward guidance and revenue metrics. But […]