Explore Your Options by Tom Gentile
Tom, I have noticed you have been pretty much bearish in this market for the better part of the year. Which
strategies have worked best with the bearish tone you have projected?
That depends. Letís look at a few stocks I have been bearish on for the past few months, and the strategy I
picked for them. For example, I decided Cisco [CSCO], Computer Associates [CA], Charles Schwab & Co. [SCH], Ford Motor Co. [F], Eli Lilly [LLY], and CVS [CVS] were all bearish by simply looking at the patterns, but it
was the volatility that told me what strategy to take. These stocks were all cheap to begin with, and the low implied volatility convinced me not to take too complicated a strategy. Instead, I simply bought 60- to 90-day put options only.