Exploring Market Volatility plus Your Questions

Listen to Advisors Option 72: Exploring Market Volatility plus Your Questions

The Buzz: The Return of Volatility Redux

  • Volatility is back…again!
  • What are your thoughts on the current volatility landscape? What should advisors be doing right now to manage this volatility and their client’s expectations? What are you hearing from advisors right now?
  • Financial Services Committee Unanimously Passes Hultgren’s Options Markets Stability Act
  • Will Bonds Protect in the Next Bear Market?

Office Hours: What do you want to know?

  • Question from Andrews S. CFA – I know that in most trading accounts brokers will allow you to write puts with somewhere between 20%-50% margin kept in reserve. But am I correct in assuming that you cannot do this in IRA accounts – only cash secured puts? That dramatically increases the capital cost associated with this strategy. Since most of my clients are in IRAs I don’t think I will be pursuing this for them. Do you think this limits the utility for RIAs since I’d imagine a large number of advisors fall into this category?
  • Question from Mr. Bodine – What are the three main options strategies used by advisors?
  • Question from TronS6 – What’s your suggested minimum account size before I consider putting a client into options?
  • Question from Matt Simpson – Are there any of the larger advisory firms that you feel have better understanding of options than others? I want more than someone who can just do 60/30/10. Maybe a nice covered call or collar plus a few speculative plays like verticals?
  • Question from Misf3t – After all your data and research are you still hesitant to recommend any particular strategy for trading options during earnings season?
  • Question from Douglas Tilley – Hello!–Regarding long stock substitution: 1. With call options, are deltas additive? I.e. why are (2) 40-delta calls so much cheaper than (1) 80-delta call? This seems like buying equivalent total delta for about half the cost. 2. For more accurate stock substitution, do you ever use the technique of buying an ATM call while selling an ATM put? (vs. buying calls for a desired total delta). What are the pros and cons (or nuances) of the 2 methods? I do notice that the 2nd method definitely requires more buying power, due to the short put. Thanks for all the education–D Tilley.

OCC Rebranded: OCC recently rebranded as part of growing role as a SIFMU, influential thought leader and steward of the US exchange-listed options industry. Through OIC, we are leading educator of exchange-listed options to the investing public.