10 Busted Myths of Options Trading
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Myth #4: Option trading will be dead when volatility in the market returns to normal.
The short answer here is -- no way. This myth is effectively busted by Wade Cooperman of tradeMONSTER, who told us, "The market's been growing in volatility for a long, long, long time. The reality is that volatility is here to stay. It will continue, though the VIX may go up or down, but volatility is part of investing."
Don Montanaro of TradeKing likens options trading and price volatility to buying insurance in Florida hurricane season. "Those of us down here in Florida are hip to the annual hurricane season, and if you go and try and buy hurricane insurance in the middle of a hurricane somebody's going to charge you more for it than if you [go buy the insurance] in the middle of the winter time when hurricanes are six months away."
The point here is that while volatility will wax and wane, options trading can be used to make profits in either relatively stable or violently volatile markets.
Options trading will fade out when volatility fades? Myth busted!
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