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Two Ways to Play: Options Transactions Hit Another Record

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Strengthen your portfolio in good times and bad.

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The best stock rally in 70 years helped push options trading volumes in the US to a seventh straight annual record. According to Bloomberg, options transactions on stocks, ETFs, and indexes reached 3.59 billion, topping last year's record of 3.58 billion. Investors used these derivatives to hedge as well as speculate on price swings as the S&P 500 posted its largest gains since the Great Depression. In 2009, the S&P 500 rallied approximately 66% after plunging to the March 666 low.

For more on trading options, see Steve Smith's What To Do With Options Before Time Runs Out.

From the Bull Pen: Yesterday on the Buzz and Banter, Professor Warner mentioned that Potash (POT) option premiums look cheap as 30-day IV is near a 52- week low. Those bullish could consider buying the stock (or call options if it fits your style) with a stop loss at $105.

From the Bear Cave: After reporting strong earnings, shares of Research in Motion (RIMM) have struggled to move higher. The bearish action in the stock over the past few days signals it may fill the earnings gap and trade back down to 62. Those bearish can short that BlackBerry makers shares with a buy stop at $71.

For more ways to play and other trading ideas from more than 30 top market pros, take a free trial to our Buzz & Banter.

A Quick Check Around the World


Asian trading closed with the Nikkei (Closed), India 0.70%, Hang Seng (Closed), Shanghai 0.45%, and Taiwan 0.93%.

Across the pond, we see the FTSE -0.13%, CAC -0.34%, and DAX (Closed). The Swiss Market (Closed), ATX (Closed), and Stockholm (Closed).

In commodities, crude oil is trading 0.05 to 79.33 while gold is trading 13.40 to 1106.0 this morning.

A quick check of the EUR/USD +0.0071 to 1.4414 and the USD/JPY -0.06 to 92.39.

Happy New Year!
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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