This is the good time to trade options & CFD

The world financial markets continue to plunge because of the rising probability of U.S. recession. Of course, if you only trade conventional equity in stock market, you may wonder -- are there still any opportunities to make money in the stock market right now? Well, what i can tell you is - if you are still trading conventional stock market, whether it's the US, Europe, Japan, or Asian markets, the probability of losing money is greater than ever. Of course you can still gain. But with the effort and time required, the stress of monitoring a downtrend market is not worth it at all.

You may say, we could short-selling the stocks. But don't forget, you need to pay daily interest for that. So, the best strategy these days in this volatile market is of course trading options. In particular put options where you gain a great deal when the market is plunging. The more it plunges, the more you gain. Added in the volatility, you could gain much more than you could expect.

For short term, the sure fire strategy is continue to buy put options on all the financial stocks in the US market, selective technology stocks and retail stocks. ISM index as the leading indicator early this month had already shown 47.70, it's already in the contraction level. If it does not show any improvements early next month, the financial stocks could plunge much more because of the rising concern of US recession.

In a mature market, you must be able to make money whether market is up or down. So, at this point, the best instrument available is of course options. Another good alternative is Contract for Difference (CFD), where you could also profit from falling market. See my previous article on CFD.

There are two advantages of trading CFD over options. One is the guaranteed stop loss which you can place on all trade, provided it is available from your CFD provider. Another advantage is the money is only allocated to trade CFD, not committed like in options. For instance, let say you have USD1000 to trade. If you buy options, let say you buy USD800 worth of options, unless you sell it, if not you only have USD200 available for your next trade. But not in CFD, let say you place a trade worth USD800 with a guaranteed stop loss at USD720, you still have USD720 + USD200 = USD920 confidently available for your next trade. This is the power of CFD trading combined with guaranteed stop loss. Of course, the disadvantage is it don't have volatility counted in like in options, where you could gain a bit more in both call or put options if there is huge volatility.