Elephant or Donkey?
•IF YOU DON’T KNOW which party plan you’re joining this year, you’re not alone. The headlines and media coverage on the spectacle that is this year’s Presidential election are giving the most hardline Dems and Reps pause, and the most aggressive traders the willies. But look closer, and what you have is, well, a lot of noise. That’s not to say the outcome won’t be important, and you shouldn’t be paying attention. It will be, and you should be—for many reasons. But for investors and traders, financial Armageddon is more than likely much further out than November.
What does this mean for you? What makes for good headlines are jabs between candidates, and the occasional punch at the political status quo. And since there is no shortage of that this year, we have the potential for increased volatility going into the election. What comes next is anyone’s guess. But our cover story, “How to Trade Presidents” (page 16), attempts to reveal some useful truths about trading elections—particularly this one.
Now, if you’re really interested in trading the election right up to the eleventh hour, you could consider weekly options that expire—as their name implies—in seven days. Whether it’s an event like an election, earnings, or the next Trump gaffe, you can speculate on the market’s next direction, or simply form a cheap hedge for a couple days at a time until the coast is clear. In “Life Is Short—Stretch It with Weekly Options” on page 26, we’ll break down these short-term firecrackers to help you make sense of what they can do and just how to trade them.
Of course, it wouldn't be a November election without an October Halloween coming first. So don’t be surprised this year if you see some scary Trump/Hillary costumes at your doorstep. And they won’t likely be 10-to 12-year olds, either. But regardless of age be sure to read our recommendations on page 38 for trick or treats that are sure to make a grown trader cry or a young child run to mommy. And if you find yourself laughing at these suggestions, you’ll know you’re as twisted as we are.