Trading Index Options

An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Most ETFs track an index, such as the Dow Jones Industrial Average, the S&P 500, the Nasdaq Composite index, or some sector or other followed market segment.

Index option are derivative financial instruments similar to options on a stock. What makes index options interesting, as opposed to a stock option, is that since the index is composed of a basket of stocks it reflects a much bigger financial entity than could an individual stock. Therefore it is less likely to be manipulated or make the sudden swings an individual stock could make. Furthermore, since an index does represent such a large financial unit its course is easier to predict in many case and trends are easier to follow.

I have developed some successful trading strategies for trading index options that are highly profitable. While it is not my intention to reveal the strategies here I will be posting the trades and you can follow my performance in them. As I do not have a track record I cannot say that I will not have any losing trades but preliminary results look very promising. Please subscribe to my blog by entering your email address in the SUBSCRIBE HERE text box for the most up to date alerts.