The following article has been featured on MarketWatch.com.
Traders are paying huge premiums for Standard & Poor's 500 Index options expiring in September, October and November.
It is not unusual to see traders worry about what might happen to the market in the typically nasty September-October time frame, but this year, they're really getting carried away.
The following article has been featured on MarketWatch.com.
Options have many uses, but are primarily used as a hedge by a number of investors and traders to take some uncertainty out of the market. This is well-known to professional traders, but less so for the novice option trader or, even worse, the investor who doesn't use options because he considers them to be strictly a speculative vehicle.
The following article has been featured on MarketWatch.com.
One way to handle uncertainty in the markets is to use broad-based options to protect a portfolio of stocks. Ironically, we produced an extensive white paper on the topic of Modern Portfolio Protection in July 2007, which we tried to market to institutional investors.
Our premise was that protection was cheap, and with the market on a very non-volatile four-year run, it was time to take some defensive action for stock portfolios.
