Finding Sanity in an Insane Market

September was the first negative month for the markets since March. In this episode, Brandon and Christine discuss with our guest, Jean-Christophe, about how to find some sanity in this insane market and protect yourself against excessive loss.

Topics Discussed

[06:08] – Week in Review

• Consumer confidence: 101.8 V 90.0E
• Q2 annualized GDP: -31.4% V -31.7%E
• Initial jobless claims: 837K V 850KE
• Unemployment rate: 7.9% V 8.2%E
• Change in nonfarm payrolls: +661K V +875KE
• Market drops Friday from news of Trump testing positive for COVID19

[15:19] – Finding Sanity in an Insane Market

• The difficulty of predicting where the market is going
• Valuations are way over-extended
• Why options are better than stocks in this market environment
• The value of playing it neutral
• If you’re bullish, it’s better to sell OTM puts than to buy the stock
• The danger of unrealistic expectations
• Stress-testing your strategies
• Useful resources for learning options
• Make sure your account is large enough to trade options effectively
• How to hedge your account with puts
• You have to love it to succeed

Resources Mentioned

• Historical option price movement: optionslam.com
• Option Volatility & Pricing: Advanced Trading Strategies and Techniques, by Sheldon Natenberg
• Market Measures by TastyTrade