Wednesday, July 18, 2007

What to do when confusion abounds

I would say that there are strong and logical arguments to stay as far back from this market as one can. But the gains in some of these stocks have been unfathomable.

Thankfully in this day and age we can buy options. The way I look at it is, if it is as bad as they say, then out-of-the -money puts on the worst companies should turn out to be profitable because of the likelihood of bankruptcies. So you play the looming market crash that way.

VOLATILTY-buy calls and puts on the indexes. You are betting on the revaluation of risk due to an increase in volatility.

And deep-in-the-money calls on your favorite stock. So that way if the market indeed goes down, you are only out of your call premium. But eventually should be covered by the puts and volatility.

Look at golds!
AEM is my favorite big dog.

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