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Two Ways to Play: Options Transactions Hit Another Record


Strengthen your portfolio in good times and bad.

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!
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No positions in stocks mentioned.

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