How to trade options in volatile markets

We have briefly discussed the long straddle above. This advanced method involves four transactions. It involves purchasing two options. For more information how to day trade successfully, click here. The most important part of any professional traders plan is how they manage risk. The maximum loss of money you can incur with the straddle options method is what you paid to initiate the trade. You will lose money if the SPY ETF does not move at all and stays at the exact same price you initiated the trade by the 30 day expiry date.

This represents the minimum account size you need to take a 1 contact trade. Just remember, if your bias changes, and you alter the method, your profit and loss of money will change. First, I should mention that I love this method on index options and index ETF options. Investors hate a double sided market. This year has been a prime example. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities. Directional trades are more risky because you are making a bet on where prices will go. You do not want to use this method if a massive move has already happened, or a massive news event has already been priced in. If prices decrease low enough, the put option gains will make up the losses for the call, and then some. This is the downside of the straddle option method.

SPY, QQQ, IWM, GLD and DIA are my favorite. Friday October 23rd close. The risk of trading in securities markets can be substantial. SPY ETF to move at least this much in either direction within 30 days to break even on the straddle options method. The solid line is the price as of now, October 23rd. Good luck and good trading, and remember to demo trade any new ideas before implementing them in your live account.

Never let a winner turn to a loser, ever! The straddle options method can be very profitable, especially when you expect volatile markets. This is because the call option and put option premium will essentially expire worthless. Sign up for one of our subscriptions and experience the edge of trading with the professionals. The maximum loss of money happens very rarely with this method. The straddle just makes a bet that they will go somewhere. You should always know when, where and why you will get out before you get in or adjust. This is called theta burn or theta decay. First of all, it is important to recognize that this method is very profitable when you are expecting a significant move to happen in the market over the next few days to weeks.

To find out how to trade more passively with options click here. If prices increase far enough, the call option gains will make up the losses for the put, and then some. That is a huge difference. You can look at the diagram above and approximate how much that loss of money will be by looking at the Y scale on the graph. Options are already very expensive at these times, stay away form long premium trades in these situations. The beauty of any options method is that once you initiate the trade, it can be molded to something different if your bias and expectations change, and they will. We need actual volatile markets to implement the straddle options method. If you only trade 1 contract, then consider taking profits at some point.

The solid line will eventually turn into the dotted one, as time passes. You should carefully consider if engaging in such activity is suitable to your own financial situation. The novice option trader is usually amazed at the devastation this scenario does to their account balance. An off floor trader is more likely to be interested in trading a price direction. This, on first reading, sounds like a smart idea. Traders that only make outright purchases of long calls and puts are like our single talent carpenter. Today we will discuss two types of volatility; implied and historic. Simple vertical spreads are generally the best choice for a directional move in a high implied volatility market. In a typical breakout to the upside, implied volatility explodes as speculator demand for calls is combined with the uncertainty and risk the option locals face.

As we can see from this simple table, a trader can make money buying a call spread in a high volatility environment without the underlying market moving higher, simply through the passage of time and a decline in volatility. Take a market position with unlimited profit potential while limiting your risk to fixed dollar amount. Scholes is an equation with five variables: strike price, underlying price, time until expiration, interest rate and implied volatility. Speculators who chased calls higher on the way up then typically sell their calls, further pressuring implied volatility as the underlying price drops. Implied volatility and time until expiration are calculated using calendar days. This common result is due to implied volatility. Traders bid up implied volatility buying calls.

Implied volatility is a way of telling the relative value of an option. Many times a breakout retraces and the call buyers are shocked at how quickly their calls have lost value. Historic volatility is simply the actual price variance for a specific underlying commodity over a specific time period. It is possible that the outright purchase of a call or put may be the best choice. Fast Break Newsletter on December 16, 2005. Call spreads in a low volatility environment are not the best choice as the benefit of a sharp move higher would be offset by an accompanying increase in implied volatility. If the market is pricing in the expectation of large price movement, a normally good move in the underlying will have little effect on price. Options are often a great way to play a volatile market; it just has to be done right. Public traders, although they are not market makers, can help themselves by learning how changes in price, implied volatility, and time affect the value of different options and spreads.

They adjust their position according to their market bias. The greater the volatility in a market, the bigger the risk. As you can see, with options it is not not difficult to determine what will happen to our position value by looking at only one variable in the equation that determines option value. Along with these opportunities come risks. If we look at the trading practices of professional option traders, or locals, we can find some help. Don at a trading seminar. First, we need to learn how changes in the underlying markets affect different strategies. What has happened to implied volatility in that time period?

If not, feel free to review some of my previous Fast Break articles on the following subjects: Buying options, Selling options, Delta Neutral Trading. If implied volatility increased enough, it would not difficult offset the loss of money in value due to the passage of one week in time. They are constantly aware of how their position is sensitive to changes in price, time and implied volatility. If we are simply long calls, the passage of a week with the underlying remaining at the same price level would lead to a lower value for the calls, right? The four known variables are used to solve for the unknown, which is implied volatility. What is not to like? It takes a little more work and study to learn how options work in different situations, but the rewards can be well worth it. How can we adjust for a high implied volatility market? We will cover a matrix of positions and illustrate how they are affected by different variables.

This article assumes the reader has a basic knowledge of calls and puts and is familiar with basic spreads. Please click to view the Investing in Options risk disclosure below. If a carpenter only used a hammer, even if he were the most skilled carpenter in the world, he could not build a house. Many savvy investors are drawn to the options markets as a way to take advantage of large price swings while limiting their risk to a defined dollar amount. This combination of lower implied volatility, lower underlying price and the passage of time usually causes a large drop in the value of calls. Historic volatility is usually calculated over a 20 day trading period, which is roughly how many trading days are in a month. They normally will try and accomplish this while managing their exposure to price moves in the underlying.

The high priced calls, in terms of implied volatility, lose a great deal of value as the market trades lower. What type of price volatility was the implied volatility pricing into the call price? Learning how changes in time, price, and volatility effect option prices will help traders chose the method that best matches their market ideas for any given market condition. As discussed above, a price breakout that attracts a buyer to the underlying market usually has also increased the implied volatility. Many times, however, an outright purchase of a call or put is not the best method. Data Source: Ibbotson Associates.

If you are nervous when the market goes down, you may not be in the right investments. Foreign stocks are represented by the Morgan Stanley Capital International Europe, Australasia, Far East Index for the period from 1970 to the last calendar year. And if you miss even a few of the best days, it can have a lingering effect on your portfolio. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Remember, you may change how your account is invested. Instead of being worried by volatility, be prepared. Consider how international income stocks could fit in a portfolio. That could help your tax planning. These different approaches offer a range of different services and different costs but, depending on the specific option, may provide professional asset allocation, investment management, and ongoing tax management.

Consider help: You may want to look at a professionally managed solution. Your time horizon, goals, and tolerance for risk are key factors in helping to ensure that you have an investing method that works for you. Keep perspective: Downturns happen frequently and have typically been followed by recoveries. Research studies from independent research firm Morningstar show that the decisions investors make about when to buy and sell funds cause those investors to perform worse than they would have had the investors simply bought and held the same funds. Technology garners the most positive marks in our latest sector report. There may be a few actions that you can take while the markets are down, to help put you in a better position for the long term. Returns include the reinvestment of dividends and other earnings.

In general, the bond market is volatile, and fixed income securities carry interest rate risk. You should choose your own investments based on your particular objectives and situation. These strategies are complex, and you may want to consult a professional before making any tax or investment decisions. There is volatility in the market, and a sale at any point in time could result in a profit or loss of money. Set realistic expectations too. Compared with a conversion when asset prices were higher, a conversion in a downturn may result in a lower tax bill for the same number of shares. Instead of trying to judge when to buy and sell based on market conditions, if you take a disciplined approach of making investments weekly, monthly, or quarterly, you will avoid the perils of market timing.

Read Viewpoints on Fidelity. Data source: Morningstar Inc. No investor likes to hear that the market has experienced a big drop. Intermediate Government Bond Index, which is an unmanaged index that includes the reinvestment of interest income. In fact, what seemed like some of the worst times to get into the market turned out to be the best times. But be wary of being too conservative, especially if you have a long time horizon, because strategies that are more conservative may not provide the growth potential you need to achieve your goals. Rather than focusing on the turbulence, wondering whether you need to do something now or wondering what the market will do tomorrow, it makes more sense to focus on developing and maintaining a sound investing plan.

The upside of a down market. Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. But volatility is part and parcel of investing. In 2015 and 2016, this general pattern played out. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. The information herein is general and educational in nature and should not be considered legal or tax advice. Indexes are unmanaged, and you cannot invest directly in an index. Attempting to move in and out of the market can be costly. Unlike individual bonds, most bond funds do not have a maturity date, so holding them until maturity to avoid losses caused by price volatility is not possible.

As interest rates rise, bond prices usually fall, and vice versa. You should also consider any investments you may have outside the plan when making your investment choices. Your own investing experience will differ, including the possibility of loss of money. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Source: FMRCo, Asset Allocation Research Team, as of May 31, 2017. Index and includes dividend reinvestment but does not reflect the impact of taxes, which would lower these figures.

When the market drops, the prices of investments fall and your regular contributions allow you to buy a larger number of shares. That could provide a disciplined approach that helps you take advantage of lower prices. These high volumes may also cause executions to occur at prices that are significantly different from the market price quoted at the time the order was entered. How securities are executed during times of volatile prices and high volume is also different in other ways. To read more, see Understanding Volatility Measurements and What causes a significant move in the stock market? For these reasons, most online trading firms offer alternatives like telephone trades, talking to a broker over the phone and faxing your order.

Volatility is typically measured by the standard deviation of the return of an investment. To learn more, see Intro To Fundamental Analysis, Reading The Balance Sheetand Advanced Financial Statement Analysis. Investors, especially those that use an online broker, should know that during times of volatility, many firms implement procedures that are designed to decrease the exposure of the firm to extraordinary market risk. Volatile markets are associated with high volumes of trading, which may cause delays in execution. On the downside, a limit order does not guarantee you an execution. See Understanding Order Execution. One explanation is that investor reactions are caused by psychological forces.

Limit orders may cost slightly more than market orders but are always a good idea to use because the price at which you will purchase or sell securities is set. During volatile times, many investors get spooked and begin to question their investment strategies. If, however, you do decide to trade during volatility, be aware of how the market conditions will affect your trade. This is especially true for novice investors, who can often be tempted to pull out of the market altogether and wait on the sidelines until it seems safe to dive back in. Volatile markets are characterized by wide price fluctuations and heavy trading. Others blame volatility on day traders, short sellers and institutional investors. The thing to realize is that market volatility is inevitable. Investors should ask firms to explain how market makers handle order executions when the market is volatile.

For the most part this is true but, on the other hand, missing the worst 20 days will also increase your portfolio considerably and in some cases, you may want to make trades during volatile market conditions. Volatility is a statistical measure of the tendency of a market or security to rise or fall sharply within a short period of time. Standard deviation is a statistical concept that denotes the amount of variation or deviation that might be expected. With the advent of online trading, we have come to expect quick executions at prices at or near the quotes displayed on our computer screens. One way to deal with volatility is to avoid it altogether. In addition, if you are trading online, you may have difficulty accessing your account due to high Internet traffic. There can be significant price discrepancies between the quote you receive and the price at which your trade is executed. Investors need to be aware of the potential risks during times of volatility. In this video shecantrade reviews strategies for part time and full time traders to trade options in volatile markets.

Sarah Potter author of How You Can Trade Like A Pro and principal trader from the live trading room at www. This video is for both beginners and advanced traders alike. Because many investors view gold as a safe haven in declining markets, gold is on the rise. Keep in mind that every individual call option represents 100 shares of individual stock that you own. Volatile markets can be scary, but playing options can hand investors a safety net and opportunities to profit on both highs and lows. You believe that the price of the underlying asset will rise by a specified time. You can use them to leverage the movements of stocks as they swing up or down. The best way to trade options when the markets are so volatile is with a long straddle. You make money when the asset price swings upward.

They also shine when markets are volatile. These are bullish bets. There are two basic forms of options: calls and puts. Brexit referendum, now is a good time for options trading. For some quick gains, look at the options set to expire at the end of summer or the end of fall. That should give enough time for some market recovery and profits along both ways. The VIX has been bouncy again this week.

Martin also chimes in with word on an incredibly shifting tax burden. Wall Street Daily Chief Options Analyst Lee Lowell go deep on a trading method that will put money in your brokerage account instantly. According to Group Credit Officer Mariarosa Verde, the commodity crisis is occurring during a more mature credit cycle. At the same time, such a view is key to risk management. When it comes to investing, the first, most important rule is to preserve capital. If it sounds too good to be true, it is. The higher the delta, the more the option price will move in lockstep with the stock price. Big Data to drive improved delivery of healthcare services.

White House for the next four years? That means growing stress among commodities poses a great danger to the cycle itself. Senior Correspondent Shelley Goldberg takes a look at the impact of the commodities crash, with a special emphasis on credit markets. Ponzified proportion of the world economy will be increasing all the time. It follows from that solid proposition that we should limit downside exposure. When an investor puts on a Call Ratio back spread, he would be neutral but would want the market to move in either direction. So, in a bull market exercise the Call, and in a bear market exercise the Put. Thus, the greater number of long options would cause the spread to become even more profitable when volatility increases. Strangles in a volatile market outlook: A strangle is similar to a straddle, except that the Call and the Put options have different exercise prices.

To put on a Call Ratio back spread, the investor would sell one of the lower strike price and buy two or more of the higher strike price. The first breakeven point would be for the Call which is the exercise price plus the premium paid, and the second breakeven point would be for the Put which is the exercise price minus the premium. The cost of the long Puts would be offset by the premium received from the more expensive short Put, resulting in a net premium received. The investor would construct this spread by utilizing one short Call at a lower exercise price, two long Calls at a medium exercise price and one short call at a higher exercise price. His expectation in this case would be for a volatile market with a greater probability that the market would fall rather than rally. The Short Butterfly Call spread: Like the volatile positions we have looked at so far, the Short Butterfly position would realize a profit if the market were to make a substantial move. An investor with a view that the markets would be volatile may also purchase a strangle. Volatile market trading strategies are appropriate when the investor believes that the market would move but does not have an opinion on the direction of the movement of the market. By doing so, the investor would receive an initial credit for the position; and the maximum loss of money would be equal to the higher strike price minus the lower strike price minus the initial net premium received.

Like its counterpart, the Put Ratio back spread combines options to create a spread which has limited loss of money potential and a mixed profit potential. If the market is volatile, the investor can profit from an upward or downward movement in the price of the underlying asset, while exercising the appropriate option, and if need be letting the second option expire worthless. An investor with a view that the markets would be volatile would purchase option straddles. Of course, circumstances may occur in which the investor may let the second option expire worthless as the expiration date may have arrived. Straddles in a volatile market outlook: A straddle is the simultaneous purchase or sale of two identical options, one a Call and the other a Put. The profit on the downside would be limited to the initial premium received when setting up the spread. Narach Investment accepts no liability whatsoever for any loss of money arising from the use of this website and its contents. We would strongly recommend that the investor first study these investment instruments along with the above listed strategies; conduct dry runs with pen and paper; understand the nuances of the dynamics of the underlying security and the connectivity between the various risks that he or she would be taking on during the pendency of a futures or options position held by him. The maximum loss of money would be equal to the higher strike price less the lower strike price less the initial premium received.

When the investor puts on a Put Ratio back spread; he would have a neutral outlook on the market, but want the market to move in either direction. Thus, the investor would usually receive an initial net premium for putting on this spread. The strategies provided here are academic in nature; and the information should be used by investors who are aware of the risks inherent in investing and trading in options in the equity markets amongst other financial instruments. In this case, the investor would have two breakeven points as he would have two long positions. The Call Ratio back spread would lose money if the market sits. The position is neutral, consisting of two short options balanced out with two long ones. Call and a Put with the same expiration date, but with different exercise prices. The market outlook the investor would have in putting on this position would be for a volatile market, with a greater probability that it would rally.

The low breakeven point indicated would be equal to the lower of the two exercise prices minus the Call premium paid minus the net premium received. The investor would realize unlimited profit on the downside. The first for the Call, which breaks even when the market price of the underlying asset equals the higher exercise price plus the premium paid; and the second for the Put, when the market price of the underlying asset equals the lower exercise price minus the premium paid. So, in a bull market exercise the Call; and in a bear market exercise the Put. To put on a Put Ratio back spread, the investor would buy two or more of the cheaper strike price Put options and sell one of the higher strike price Put option. As long as there is significant movement upwards and downwards, these strategies offer profit opportunities. The investor is neutral, but would want the market to move in either direction. The two long Puts offset the short Put and result in practically unlimited profit on the bearish side of the market. The potential gains are limited on the downside and unlimited on the upside.

The maximum loss of money would also be limited. The investor need not be either bullish or bearish; he must simply be of the opinion that the market would be volatile. Calls and Puts to achieve similar, if not identical profit profiles. Puts at a lower exercise price and write one Put at a higher exercise price. Call and a Put with the same exercise price and expiration date. If the price of the underlying asset were to remain stable, the most the investor would lose is the initial premium paid to establish the options position. However, as with any option method, either option can potentially be closed out prior to expiration, or held until expiration. Keep in mind that this example does not consider commissions or other transaction costs, which could significantly impact the potential profit or loss of money. The trader will continue to profit all the way down to zero.

If the underlying stock moves enough in one direction, you might also choose to close out both legs early at the same time, if that can be done at a net profit. Additionally, a stock often becomes more volatile the closer it gets to an earnings release, potentially increasing the value of both the puts and calls. Entering and exiting a long strangle at the right time may allow you to profit from this change in volatility. Like straddles, strangles can also be used as a volatility method. Because two options must be purchased, initial costs will be higher. Long strangles allow you to take both a bullish and a bearish position at the same time.

In a true long strangle, the expiration date of the put and call would be exactly the same, but the strike price of the call would be higher than the strike price of the put. How do I create a strangle? Keep in mind that if a large directional price movement occurs between the date the options were bought and the date the options were sold, the loss of money on one option could be enough to eliminate the gains due to the volatility increase. With a very volatile stock, it may be possible to profit on both options, if each is closed out at the proper time. In this case, the long strangle should be closed out as near the market close as possible, when the implied volatility is typically highest. As a volatility method, increases in volatility can cause the value of both calls and puts to rise, resulting in a profit on both options if closed just prior to an earnings report. The higher initial cost increases the amount of potential loss of money that could be incurred.

Because of this gap between the strike prices on long strangles, the maximum loss of money occurs over a range of prices, rather than just at a single price. Ideally, a long strangle sees the underlying security move enough in either direction such that the option that gains value gains enough to offset the cost of both options. The amount of movement needed to profit depends on the premium paid for each option, as well as the price of the underlying security at the time the strangle is established. He also will not exercise his 75 calls because they are out of the money. At the same time, his long 75 calls will expire worthless. If the underlying stock moves enough, you may be able to close out either leg of the method at a profit prior to expiration. Again keep in mind that the examples do not consider commission costs.

While the larger loss of money range and greater price movement needed are both disadvantages relative to long straddles, long strangles are actually more common because the initial cost is often much lower. As a volatility method, decreases in volatility can cause greater losses, since decreased volatility causes the value of both calls and puts to drop. This makes long strangles especially popular during earnings season. Good luck and good trading. Long strangles can have both advantages and disadvantages over directional strategies, such as long puts or long calls alone. Consider long strangles if you expect a big move in either direction or an increase in implied volatility. There were many methods that Jim Cramer used to become a great money manager on Wall Street. Boring, by the way, is a good thing for your portfolio.

That is why it is so important to know how to trade around a core position. Buy it four times over a span of weeks or months until you reach 100 shares. Buying it all at once is just plain arrogant, in his opinion. And now he wants to show investors how they can use these same techniques to make money. This is a discipline that is incredibly useful, especially in volatile, crazy markets. Keep shaving a little off the top to bring in some profits. Think of a company with solid fundamentals that can stay strong when the market becomes volatile and will go higher with a little patience.

What does it mean to trade around a core position? Unfortunately, that also means knowing that you might be bored; you will need lots of discipline. Then when the stock comes down, you start to buy it in increments again. For instance, if you want to own 100 shares of your favorite stock over time, then Cramer wants you to buy the stock in increments of 25. In order to be a successful investor, Cramer thinks that will require a lot of discipline. That will pay off, as it will allow you to buy the stocks you like at lower prices and sell more shares when they are high. Trading around a core position is an important basic trading method that everyone can use, even those of you who find the notion of trading, as opposed to investing, to be abhorrent. Cramer recommended establishing a position in the stock through buying in increments.

This might appear to be small potatoes, but over time the profits add up. This way, if the stock takes a hit and goes down, or if you have too little on the table to take advantage of an upside, you are prepared. Cramer does not want investors to think that only professional traders can trade. But what if you want to live a little and trade? If you wanted to start trading on your core position, then every time the stock jumps 5 percent, you should sell 25 shares. The purpose of this technique is to avoid putting yourself in a position where you have too much money on the table for a stock. Up 5 percent and sell 25 shares, then buy it from where you started; the cash in your pocket will start to accumulate. This is called scaling out of a stock, though Cramer always likes to keep the last 25 shares if he loves the stock.

First, pick a stock that you both like and believe will go higher in the long term. So, the next time the markets you focus on reach extremes, coupled with a big spike in implied volatility, consider selling out of the money put spreads if the market drops to bearish extremes or selling out of the money call spreads if the market rallies to bullish extremes. Unfortunately, a great many investors are net buyers of options premium, which stacks the odds of making money against them over time. Options premiums rise as the implied volatility in options rise. Just because the odds favour the seller of options premium, however, does not automatically make it a consistently profitable method. Increased volatility, however, also means that strategies must be changed; in particular, a few options strategies become much more attractive to use, if applied the correct way. And therein lies the opportunity.

So, where is the right spot to sell options premium? EURUSD, meanwhile, continues to look robust despite a lack of support from other major dollar pairs. By selling puts or put spreads, investors could profit from the big spike in implied volatility by selling options for an unusually juicy premium. August 25 a good spot to buy some stocks and an even better spot to sell puts or put spreads. When markets get volatile, traders must adjust. ETFs and options can be utilized to construct portfolios that are continuously protected against unforeseen calamities.

Great Information on a Very Complex Subject Stock investing in times of extreme volatility without any downside protection seems too much like a crap shoot and I have previously avoided Options and ETFs as being too. Understanding options is now more important than ever. As discovered during the financial hurricane of 2008, asset diversification is not enough. ETFs and they continue to grow in both availability and popularity. In addition, they discuss new offerings like weekly expirations and options on ETFs. In fact, let me put it this way: If you think you know options markets, think again. If you think 2008 was a complete outlyer event, take a look at the charts the last 10 years and notice how much larger the swings have been. VIX and VXX, andemploy volatility strategies to hedge an equity portfolio.

The book was very short on strategies. Once again, McMillan and Lehman have created new and insightful updates into the world of derivatives trading. Edition is overly generic and therefore somewhat misleading. ETF especially the elusive VIX. In Options for Volatile Markets, Richard Lehman and Lawrence McMillan provide you with specific strategies to lower portfolio volatility, bulletproof your portfolio against any catastrophe, and tailor your investments to the precise level of risk you are comfortable with. Customer support including tracking numbers through Your Account on Amazon.

For investors interested in modifications to the basic covered calls method, hedging with protective puts, collars, and option spreads are also presented. After witnessing the financial market volatility of the last decade, absolute returns and consistency of those returns should be a key objective of institutional as well as retail investors going forward. This book is not nearly as good. Lehman and McMillan provide a roadmap of creative, intelligent, and purposeful options strategies for achieving exactly this. The book is pretty short, only 200 pages and the last part dwelled on volatility with more definitions and advantages and disadvantages etc. Properly implemented, option strategies can be the difference between financial success and failure during volatile times. Did I, an experienced options investor, need a refresher on the simplest, most conservative method, covered writing? Successful investment management over time is not driven by how much one makes, but rather by how much one consistently does not lose.

It seems he is trying to just churn out books. Richard Bensignor, President and Chief Strategist at Bensignor Strategies, Inc. This major flaw should be corrected prior to the next printing of this book. With economic and market uncertainty at a very high level, options are still the most effective tool available for managing volatility and downside risk, yet they remain widely underutilized by individuals and investment managers. Excellent definitions and explanations of options terminology; and especially insightful discussions of important topics such as time value decay, skews, implied volatility, and historic volatility. PRAISE: First and foremost, I confidently assert that this book is the single best resource now available that is focused primarily on the subject of covered calls investing.

Engaging and informative, this new edition remains trueto the core method of covered call writing, but also expands into more comprehensive option strategies that offer deeper downside protection or even allow you to capitalize on market or individual stock volatility. Be prepared with the tactics in this book. McMillan Strategies book volumes. It seems geared to newbies. The best investors and traders of which I know focus first on risk management and secondly on profit maximization. Great Book For Starting Out AND Advanced Option Traders. It dwelled on definitions and listed advantages and disadvantages for example of puts and covered calls. While the core method of this new edition remains covered call writing, the authors expand into more comprehensive option strategies that offer deeper downside protection or even allow investors to capitalize on market or individual stock volatility.

If you lost money in the 2008 market read this book! Most options traders already know this. McMillan, and now, with the Second Edition of Options for Volatile Markets, they share their extensive experience in this evolving field with you. Edition is a substantial improvement. Buy puts: You can turn to the options market for protection or profit. What should investors do now? Given the likelihood that the market becomes even more volatile this summer, this is not the time to take unnecessary risks. Trading in advance of the end of QE2 is like playing poker with Ben Bernanke. All bets are off if upheaval in the Middle East spirals out of control, Baumohl said.

For protection, buy protective puts on stocks you already own. Harwood said, which occurs when pumped up implied volatility falls back to normal levels. After spending many years in Wall Street and after making and losing millions of dollars, I want to tell you this: It never was my thinking that made the big money for me. Accordingly, traders should brace for more volatility as June 30 approaches, given the state of confusion many market participants are in. Straddles come into play if you expect the market to move aggressively in one direction or another, as has been the case over a couple of trading days this week. Consult your broker before initiating any options method. As a trader, you should always look for profitable opportunities based on probabilities and your own judgment. QE2 is going to create a big wake once it docks. If you want to speculate, buy puts on individual stocks or indexes. You can also learn more about options at the OIC web site: www. If you use any of the above trading strategies, cut back on share size.

Yet this method is not for beginners. Fed might do next. But you get the feeling that something is in the midst of changing.