Bryan Perry

ETFs Provide More 'Options'

    Tweet This

So, for example, you could buy calls on the XRT as holiday spending is ramping up, and perhaps buy puts on it after the holidays or during other seasonally slow times of the year.

A FEW DIFFERENCES BETWEEN ETF, EQUITY OPTIONS

Something different about ETF options, in comparison with standard stock options, is that they trade in $1 increments and that they are only available during select months during the current year.

For example, if an ETF is trading in the $40 area, you can buy its options at whole strike prices from $39 to $45 (that is, you can buy a call with an exercise price of $42 but not one at the $42.50 level) -- these exercise prices are established to encompass the range that the current market price falls in.

Your broker can point you in the direction of optionable ETFs -- you can trade puts and calls on anything from utilities to pharmaceuticals to financials to leisure-and-entertainment baskets, and a whole lot more.