Option Trading Tips for Anxious Investors: Try an Apple (NASDAQ:AAPL) Put

Schaeffer's Investment Research
  OCT 01, 2012 10:20 AM

Expert tips, tricks, and strategies to protect your portfolio.


At this stage in the global economic recovery, the daily financial headlines are about as sunny and upbeat as your average Edgar Allan Poe story. On any given day, investors might be panicking over the death of the euro, China's hard landing, the U.S. fiscal cliff, or -- that perennial standby -- political turmoil in the Middle East.

Here at Schaeffer's, we take a slightly more pragmatic view. As contrarians, we generally try to avoid following a panicked herd of retail traders over any kind of cliff (whether fiscal, figurative, or somewhere in between). That said, it's never a bad idea to hedge your bets against the worst-case scenario, especially if these cautionary measures help to keep your anxiety levels to a dull roar. After all, we're in this market, too -- and a tidal wave of panic-selling won't do anyone's 401(k ) any favors.

Every week, Senior V.P. of Research Todd Salamone shares our Monday Morning Outlook, where he highlights the key technical levels and sentiment indicators that could influence the market's short-term direction. If you're looking for actionable ideas and timely trading tips to stay proactive in a wild market, be sure to check out Todd's commentary each week.

And in the meantime, here's a roundup of our best expert advice on volatility, the fine art of hedging, and all-around disaster-preparedness to gird your portfolio for the End of Days. (You know... just in case.)

Tip No. 1: Forget the "Bernanke put." Try some Apple (NASDAQ:AAPL) puts instead.

Tip No. 2: Be your own one-person"plunge-protection team."
Tip No. 3: If it's already broke -- fix it!
Tip No. 4: Sometimes, a protective put is just too pedestrian...

Tip No. 5: ... but let the (spread) buyer beware when hedging with two legs.
Tip  No. 6: Get comfortable with fear.
Tip No. 7: Play the potential market crash with... call options?

Tip No. 8: Know the do's and don'ts of trading volatility.
So, there you have it. Whether or not the Mayans were right about this whole 2012 thing, you've got all of the tools and knowledge you need to build a metaphorical bunker around your portfolio. And now that you don't have to worry about panic-selling out of your stock holdings, there's plenty of time to catch up on all of those DVR'ed episodes of Doomsday Preppers you've been stockpiling.
This article by Elizabeth Harrow was originally published on Schaeffer's Investment Research.

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No positions in stocks mentioned.