It's becoming more and more uncomfortable to watch what's going on around me. I live in a Chicago suburb, but as I go about my business in this and neighboring suburbs, I see more and more empty stores. Even the larger companies are going away. Linens 'N Things, with Circuit City about to follow. And so many banks have failed and the automakers are in big trouble. Everyone says this is far from over.
It's not all doom and gloom, but the future for millions (dare I say billions?) of people does not look bright. On top of the poverty that already exists in many regions, this cannot play out well.
Personal sadness aside, is all this negativity I feel a contrary indicator? Is the market successfully going to bounce off last year's lows? Or is this just the beginning stages of an economic upheaval?
Is extreme volatility going to return, or are the markets going to remain at current levels – more volatile than average?
I have no answers to my questions, but I must either sit on the sidelines or find option strategies that are appropriate for the coming stock market events. I understand that I am just stating the obvious, but I want to be certain that I don't close my eyes, hoping for the best, and putting my thoughts (fears) in writing means I will pay attention to the possibilities and find ways to accomplish my two major goals
- Protect myself against losses that occur due to extreme movement
- Earn profits from my traditional premium-selling methods (primarily trading iron condors)
Rhetorical questions: Are things rally as bad as they appear? Can the politicians make changes that work? Am I wrong to think that most investors are too complacent but that most traders can survive – and enjoy – the volatile days?
Good trading to all.