Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
If you think that trading options is not for you, think again.
Set aside all the stories you may have heard about high rollers and market gamblers who bet the farm on whatever the next big thing might be.
The truth is that options can be part of a conservative investment strategy.
That's right - conservative.
You can use options to hedge your portfolio against losses or you can take advantage of a market pullback without having to sell your stocks and incur possible tax consequences.
You can even use options to generate a steady stream of income with low risk and for low cost. You may have even read about "selling covered calls."
So, let's talk more about profiting from a market decline, because stocks have been on shaky ground since peaking earlier this month...
Many of those high-flying technology stocks are now taking it on the chin, and it's no wonder.
The Nasdaq Composite Index was up a whopping 76% from its March low through Sept. 2.
How many stories did you read saying how overvalued they were? Well, the piper is now being paid as these stocks pull back even harder than the broad market.
You can be conservative and buy some put options as an insurance policy against losses in your portfolio. Or, you can make some real money trading options to take advantage of the correction itself.
And what a correction it could be with all the unknowns out there...
Will there be a second wave of infections? Will there be a safe vaccine that can be mass-distributed soon? And what about the ripple effect from all the jobs that have been lost and may never come back?
Of course, we have not even mentioned the division over the pending presidential election...
That is a lot to worry about, and if there is one thing the stock market hates, it is uncertainty.
Money Morning's own options trading specialist, Tom Gentile, thinks there are more declines ahead. And he thinks protecting your portfolio with options is the way to do it.