by Max G. Ansbacher
Just in case you haven't noticed, this market is vastly different from 2014, and it can't be traded in the same way. In 2014 we had magnificent trends which would go on for days, mostly on the upside, bringing profits to anyone who was on board.
In 2015 a "trend" is anything that lasts more than an hour before completely changing course and trashing anyone who dared to follow it. If you want to be a trend follower in 2015 you better be prepared to be on top of the situations in the Euro currency, at the Fed, with the price of oil, with what happens in the Ukraine, in Greece, in Iceland, in the U.S, Congress, with President Obama, with Hillary Clinton, and with all the Republican presidential candidates. And even this is only a partial list of the inputs which have changed the direction of the 2015 markets.
Yes, it is impossible to keep up with all these situations. And even if you could, you still wouldn't be able to predict which of them will suddenly explode tomorrow and in what direction they will push or pull the market. What's an investor to do?
The answer is that instead of using a strategy where you are forced to make impossible guesses about whether the market is going to go up or down and by how much, you can convert to a strategy that will be profitable within a range of future market moves.
And what strategy will allow you to make profits within a range of market outcomes? There is one strategy which can provide exactly that, and that is writing well selected options. For example, you could write an option which will be profitable whether the market goes up, stays still, or goes down by as much as 100 S&P points within a specified period of time. Sounds too good to be true? Just look at the results that this strategy has obtained for our clients so far this year.