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December 19th, 2009 at 1:37 pm
bord:
Phil uses the RUT as one of the major indexes he follows to determine breakout/breakdown levels in the overall market. A number of us day trade the market to pick up dimes and quarters in addition to our major investments. Sometimes he’ll invest in cash-settled RUT options if he sees a good opportunity. He’ll also use a variety of ETFs (on the RUT or other indexes), generally as hedges and to provide balance. Often he’ll use the leveraged ETFs.
Peter D is the resident expert on trading options on indexes as a main trading strategy. He generally trades cash-settled options on the SPX (S&P 500) and RUT. My understanding is that he’s more partial to SPX, but RUT provides diversity. I’m a novice trying to learn his system. Peter focuses on selling short strangles, and interlacing that with buying put verticals. Again, he usually trades cash-settled options, not ETFs. His system is all about capturing premium he’s sold and using margin wisely.