Taking Some Profit With Online Options Trading

By Simon Natta • November 29th, 2008

The news certainly looked better for the online brokers and individuals who dabble in online trading and online options trading yesterday.

It looks as if credit markets might be loosening and that some intra bank lending is at least going on. Why not? With many governments around the world guaranteeing money and deposits at banks it just makes sense.
It’s been a crazy ride in the online stock trading world, yet there can be buys out there.

There seems to be movement downward in the commodities markets, reflecting decreasing demand around the world. Copper on the average is down quite a bit. Some other things edged up yesterday, and might today, but the question hovering out there is, how bad will any downturn be?

Nobody has officially used the “recession” word, because the official definition of recession has yet to be met. That’s all official.

Unofficially, there is a feeling — and proof– that demand has been lagging the last two quar-ters, and that the earnings statements coming out over the last few days will show that.

Then what happens to equities as well. Right now, I believe the rallies in some of the indices are based on credit somewhat loosening. What happens when the reality of the real world situation sets in?

Normally, the markets are a look forward in to the general economy, but the markets have been so panicked that I don’t think they have been behaving wisely. The markets are like a person who temporarily loses his mind. Sooner or later he settles down (hopefully) and begins to become aware of the situation around him.

There is some bargain buying going on right now, particularly overseas in tech and bank stocks, but once that is completed, what is the appetite for further meaningful purchases?

I think some of those buyers are hedging their buys by going short not too long out of the box. I’d be inclined to take some profits while I can, so if any of those bargain buys go up, out I would go. Or I’d at least buy some calls and cover myself.

Another looming factor to think about is the reaction to whoever gets elected as President of the United States. One candidate, Barrack Obama, is sounding very protectionist, and the markets will not like that going forward.

That can lead to a lot of insecurity in the markets between election and tak-ing office. Barrack Obama also has an unclear capital gains program. McCain is equally confusing. He has offered a number of rescue plans that might end up costing the beaten up tax payer even more.

Still, there is a little lighter feeling today versus a week ago. However, today is the so-called “triple witching”, which could cause a massive sell off if the erratic players aren’t too hap-py.

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