by Robert Williams, Publisher
Tuesday, January 5, 2010
Before we close the book on 2009 for good, let me share one more fittingly “expect the unexpected” storyline.
Options Clearing Corp. reported that a record number of options contracts – 3.6 billion – changed hands last year.
Surprising, to say the least, considering that hedge funds – the foremost user of options – massively scaled back their trading activity. Knowing they had, experts were anticipating options trading to be way off for the year…
But remember, we’re talking about 2009 – a year defined by surprise. And, in an unforeseen twist, non-professionals scampered into the options market to fill the void. Many of them were trading options for the very first time, too.
It makes perfect sense.
You see, most novice traders think of options as a way to make highly leveraged bets, where the losses are often as big as the gains (if you’re wrong). However, such endeavors represent only portion of the options trades made in any given year.
Ingenious options strategies exist that can generate a safe income stream. Or even protect your downside on a stock.
The fact that trading volume is up among individual investors means that word is finally getting out.
If you’re still not using options, give Karim’s article on VIX volatility a read. And know, too, that his track record is consistently among the best in the business.
Ahead of the tape,