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Making a Killing Trading Options on Financial System Weakness

This has to have been one of the most lucrative periods in history for individual options traders to make money day trading.  With the way banks and institutions have had their hands tied for several quarters since the Lehman Brothers collapse, those who did continue to have access to credit have been fortunate indeed.   If you don’t know much about options or don’t want to manage a portfolio you can still use something like an option advising service to do it for you (read more about automated options trading).  If you have excess capital to day-trade, there probably is no better time in history than now due to the ‘house’ – the banks – has it’s hands tied and is unable to enter the market freely to take on risk.

It remains to be seen whether the Dow will ever dip below 7,000 again (don’t hold your breath) but there have been NUMEROUS good option picks to trade on the dips.  I’m not sure how much longer banks will be un-winding their leveraged positions and sorting out the credit-default swap mess but every time they are forced to dump shares on the market to ‘raise capital’ that is the moment to strike again into the options market for calls (see a basic call option example).

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No Comments updated June 13, 2010