Take Advantage of Volatility

Volatility remains extreme. Just today the market moved from a 4% loss to an almost 7% gain before closing. That is a swing of 11% in just one day without any earth shattering news! There is simply no explanation, other than the market is out of control! Volatility is so high that it is clearly hard for investors to stay rational, particularly given an irrational market. But options give investors an excellent tool to take advantage of the volatility. With option premiums high due to volatility, now is an excellent time to cash in on premiums by shorting options. Just make sure you protect yourself at least on down market moves by limiting your risk. Another strategy, buy both the put and call on at a specific exercise price, and sell each option when the index moves 4 to 5% in your favor. With the swing today, you would have made money on the put in the morning and the call by the close! The market is moving in 5% swings with frequent regularity. It make take several days to close both positions, but you may be able to profit on the price swings. Just set limit orders on the sale, so when the market bounces you can get out with your profits.