Crash Protection Tip Number 2

We’re moving right along with tips for protecting your portfolio from downside!

Volatile markets are great for making money, but they can be tricky to trade in…

You don’t want to just buy whatever is going up, you might get caught in a sharp sell-off.

One thing you CAN do though, is buy options on the VIX!

The VIX is an index that tracks the market’s expectations for volatility.

So naturally, in a more volatile market the VIX will go up. In a calmer market, it’ll go down. Pretty simple…

But here’s the best part, you can trade options on the VIX!

So if the markets have been steady for a while and you’re expecting some volatility, it might be a good idea to put on some VIX options.

Profit-taking pullbacks can send the VIX higher, potentially offsetting some of the red you might see in your portfolio!

That’s the power of options!

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Trading Tip of the Day: What to do in a Volatile Market?

Greg Guenthner

Market environments like we find ourselves in today are hard to trade successfully in, there’s no secret there.

But are you supposed to just stay all cash until things blow over? That’s certainly no fun…

So how can you trade successfully when there are so many ups and downs?

Well for starters, you can adjust your position sizing by putting on smaller positions until sentiment gets bullish again. This way, it’s not the end of the world if you lose out on a trade.

You can also run a scanner every so often to find which pockets of the market are working, Finviz has a great one that is free to use.

Doing this every other trading session or so will give you an idea of which stocks are outperforming the market.

There are always ways to trade successfully, just make sure to adjust your risk tolerance alongside the current market environment.

— Greg Guenthner

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Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

Transitioning from a clerk to a floor...

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