Defensive Investing: Defeat Market Volatility With an Options-Straddle Strategy
June 14, 2010 at 06:00 AM EDT
It's often said the stock market can deal with anything but uncertainty, but uncertainty is about all the U.S. stock market has to feed on these days - and that has translated into raging volatility and huge swings in both the major market indexes and the prices of many individual stocks. Day-to-day swings of 250 or 300 points are becoming almost commonplace - and the direction those swings will take is an ever-growing mystery. Just look at the Dow Jones Industrial Average as a case in point. Since late February, the Dow has climbed from 10,325.26 to an intraday high of 11,258.01 (on April 26), plummeted to an intraday low of 9,869.62 during the May 6 " flash crash ," rallied back to 10,896.91 on May 12, dived to just 9,774.48 during the day on May 25, closed below 10,000 for several days in early June, and vaulted back up above 10,170 at the market's close on Thursday.