by Bryan Perry 09/02/08
So, for example, you could buy calls on the XRT as holiday spending is ramping up, and perhaps buy puts on it after the holidays or during other seasonally slow times of the year.
More Trading Ideas
A FEW DIFFERENCES BETWEEN ETF, EQUITY OPTIONS
Something different about ETF options, in comparison with standard stock options, is that they trade in $1 increments and that they are only available during select months during the current year.
For example, if an ETF is trading in the $40 area, you can buy its options at whole strike prices from $39 to $45 (that is, you can buy a call with an exercise price of $42 but not one at the $42.50 level) -- these exercise prices are established to encompass the range that the current market price falls in.
Your broker can point you in the direction of optionable ETFs -- you can trade puts and calls on anything from utilities to pharmaceuticals to financials to leisure-and-entertainment baskets, and a whole lot more.
Use Option Collars to Button Up Gains
If one of your stock has made some significant gains, a collar is an option strategy that can help you preserve your profits and protect you in case the shares take a tumble.
Exchange-traded funds (ETFs) are turning into the 'next big thing' in many investment circles.
Take Options Profits in STRIDES
Learn about a type of hybrid security that is structured like a bond and matures in a fairly short time frame, and even pays dividends.
Build Your Own ETF with Options
If you're finding it tough to grind out profits in the current trading environment, consider this strategy: Create your own ETF with options from stocks in hot sectors.
You don't have to buy the same number of contracts with every options trade you make, especially when trading the options of higher-dollar stocks.
