Chapter 12 Strategies in Volatile Markets: Uncertainty as an Advantage

The business of life is to go forward.

̶̶ Samuel Johnson, The Idler, 1759

Options traders must be concerned with the details of how and why they make decisions. The selection of stock, degree of risk, exposure, use of capital, which option to trade, whether to go long or short, and whether to use calls or puts are all decisions that determine how successful you are in your option trades.

This chapter presents a strategic approach to options trading in volatile markets. Investment holding periods have been reduced from years to weeks and often to only a matter of days. The fast turnaround is one change in the market that adds to volatility, also drastically affecting how stock ...

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