BEST OPTIONS TRADING VEHICLESWhat are the best options trading vehicles to use? The answer might be shares of a specific stock, particularly high-quality, dividend-paying issues. One of the problems with many specific stocks is that they can fluctuate quite a bit in value from day to day. This can give heartburn to the option seller who is waiting for her option to expire, because wild fluctuations in stock price always translates to volatile movement in option value. The option seller wishes to minimize this wildness, preferring to watch the option slowly expire as the underlying stock fluctuates little.
In addition to individual stocks, there is another options trading vehicle to be found in ETF's. These are baskets or indexes of many stocks which can be bought or sold just like individual stocks. Many of these have associated options. So, covered calls and cash-secured put sales can be done with these ETF's as well. Some of the better known ETF's are the Nasdaq traking index (QQQQ), the Dow Jones Industrial tracking index (DIA), and the S&P 500 tracking index (SPY). Each of these ETF holds all the stocks that make up the index, and because of this, the volatility of these ETF's can be greatly dampened compared to many individual issues. You may wish to consider using broad-based ETF's such as these as at least part of your safe option-trading income program. For an external link to more about ETF's check out the following:
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