Chris Rowe

Another Reason to Trade Options

by Chris Rowe   09/11/08

You might scratch your head when you hear Wall Street pundits referring to the current market as "directionless." How can that be, when the markets can spike a few hundred points one day and then take back all those gains, and then some, the next?

These crazy conditions have caused many investors to cash out of the markets and bank their cash for "better days." Meanwhile, those of us who trade options have been enjoying these wild days, capturing quick -- and huge -- profits in a matter of days or even hours, thanks to these unpredictable conditions.

Give me a wild-and-crazy market any day -- it sure beats having cash sitting on the sidelines, where it's doing absolutely nothing!

Not only has the past year been an amazing time to be an options trader, but with many lending institutions falling over like dominoes, those who viewed the stock market as being "too risky" during this time have, unfortunately, learned the hard way that there are no guarantees even when you're not invested.

BANKS, SAFETY NO LONGER SYNONYMOUS

For a lot of people, $100,000 might seem like a big chunk of change, but imagine if you went to bed with millions in the bank and awoke to only a hundred grand.

Unfortunately, in this crazy market, this scenario is becoming all-too-common. With the Dow's (DJI) strong swings, many investors are feeling the sting from paper losses. But what about when it's "real" money (i.e., cash that you might have pulled out of the markets or otherwise spent a lifetime earning and saving) that was supposedly safe in your lending institution?

I touched on this subject, but I think it bears a more in-depth look.

ANOTHER BANK IS 'DUST IN THE WIND'

The Federal Deposit Insurance Corporation (FDIC) seized the assets of Columbian Bank and Trust of Topeka, Kan., in August, leaving many customers and investors wondering whether their lending institution of choice is next.