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Index
Options
Trading
index options can be a very effective method of investing because
index options reduce some of the fees associated with mutual funds,
while still offering the risk-reducing diversity that mutual funds
offer. There are many investors who believe buying index funds
is the best way to invest in stocks, as no mutual fund has
outperformed the S&P Index over a long period of time. You
also save on commissions and management fees. Moreover, index
funds are much less prone to scandal than mutual funds, so they are
even less risky.
Options
trading for index funds is an effective way of leveraging your
positions. Index funds generally have much less volativility,
so they are great for the calendar
spread and condor
spread.
QQQ
- "Cubes"
The Cubes is an index option for the QQQ, which consists of the
top-100 non-financial Nasdaq firms. It is very heavily weighted
with tech firms. For that reason, it has been much more
volatile than other indices of the past several years.
However, QQQ options are the most highly traded option in ther
entire option market.
DIA
- "Diamonds"
The Diamonds index tracks the Dow Industrial Index. It allows
you to purchase a weighted average of all Dow firms, at 1/100th the
cost. For example, when the Dow trades at $10,450, one share
of DIA trades at $104.50.
SPDRS
- "Spiders"
The Spiders is an index fund that tracks the Standard and Poor's
500. The Spiders have generally were the best performing
managed fund investment in the 1900s.
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