It’s very dangerous and scary trying to catch a falling knife or pick a bottom of any market, particularly this one. However, with the SPDR Trust (SPY) off some 25% and many individual stocks down 50% or more, it may be time for investors, especially younger ones with a longer term horizon, to start nibbling.
The rational approach is to use some form of dollar cost averaging, let’s say deploying 10-20% of your capital for every 5% decline in the overall market or individual stock’s price.
It also makes sense to employ an option strategy with the relatively high level of the VIX currently, which translates into pumped-up premiums across the options market.
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