Market Watch
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By Charles Delvalle A question from a reader: Isn't there a mutual fund that covers the best overall foreign stocks? Wouldn't that be an option for your future funds with the interest being reinvested until you needed them? I think it would bring in more interest also. I might be wrong, I am just a very small investor but I like to study and hope for more one day. Thanks, Greg |
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| Friday, 22 February 2008 | ||||||
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So what’s the significance behind the number "24"? It has nothing to do with Kiefer Sutherland, covert government agencies or counterterrorism. It’s about where the CBOE Volatility Index, or VIX, is hovering today. As you might know, the VIX measures the expectation of volatility in the market. A higher number corresponds with more volatility - and more fear - among investors. That’s why some call the VIX "the Fear Index." Today, the VIX is currently about double what it was a year ago. You see, after YEARS of being compressed and generally hovering at levels between 10 and 14, the VIX finally started climbing in the summer of 2007. And overall, it’s stayed much higher ever since. In fact, lately it’s been hovering around 24 or even higher. And that’s a good thing for options traders. A really good thing. INCREASED VOLATILITY = LARGER PROFITS Why? Because increased volatility means equity prices fluctuate more, which can lead to bigger profits. As a recent quote in Bloomberg News put it, "The options market thrives on fear...When there’s more fear, there’s more opportunity." It’s one of the reasons that we experienced the busiest week EVER for options trading in the second week of January, with 93.8 million contracts changing hands, according to the Options Clearing Corporation. It’s also the reason big investors like Wells Fargo & Co. nearly doubled their use of options for clients last year, according to Bloomberg News. WHY YOU HAVE TO ACT NOW I expect that stock market volatility will begin to recede later in 2008 from the current elevated levels, so now is a great time to scoop up profits from big stock jumps. And it’s a good reason for you to start making options trading a bigger part of your overall investing strategy. In fact, you can start making larger profits on your trades almost immediately...my Leverage Series makes it easy for you. Excerpted :Schaeffer's Investment Research This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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