Trading Options in the Year of the Rabbit

Add bounce to your portfolio with measured options investing

   

Options can be like rabbits, moving quickly and sometimes unpredictably. They can jump down a hole or leap into the air. In February, it’ll become the Chinese Year of the Rabbit. We believe this bodes well for options.

But using a rabbit to characterize options trading also serves an important purpose. Remember, in the race between the tortoise and the hare, the tortoise won. Although quick can be good, slow and steady often prevails over the long haul.

The point is options are an excellent instrument to add a little spice to one’s overall portfolio. But the bulk of your portfolio should be in a well-thought-out, steadily appreciating, risk-adjusted, principal-protected portfolio with solid positive expectancy.

Options should be a sliver of your overall liquid net worth — maybe 10% or less. In the good years (like the Year of the Rabbit), they should give you some extra spending money. In the bad years, they’ll give you an education. But in all years, they shouldn’t change how you live.


Article printed from InvestorPlace Media, http://investorplace.com/2011/02/trading-options-year-of-the-rabbit/.

©2014 InvestorPlace Media, LLC

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