Sunday, April 19, 2009

Volatility Plays Provide Gains


As I mentioned in previous blogs, Volatility is a key indicator that needs constant monitoring. When markets are trending, my volatility measure advances. The rule is to stay with the trend. When Volatility begins to lose strength, there is a good chance that the price movements will lose their magnitude. The move runs out of energy. In times like this, you can take advantage of the lull by selling options. By selling options, you can lock in some of your gain and get paid for the time value of the option. For the most part, you will only see me selling options in my blog. More about this in the future.


“Big currency moves are behind us,” said Maxime Tessier, chief of foreign exchange at Montreal-based Caisse de Depot et Placement du Quebec, Canada’s biggest pension fund manager, with C$120 billion ($98.6 billion) in assets. “The volatility spike has to unwind itself over time. Selling volatility has been the winning trade so far this year and will continue to work well.” Bloomberg article.


Follow my trades and you will learn what it has taken me 20 years to learn. While there is some "feel" to trading that can only be gained from years of experience, one can easily learn and master the tools needed to time your transaction.

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