In This Chapter
Understanding exchange-traded funds
Reducing volatility with sectors
Implementing ETF strategies in your portfolio
Trading ETFs and ETF options
Exchange-traded funds (ETF) are now a part of the investment scenery and can be extremely useful tools for professionals and individual investors. Much more importantly, ETFs are a great tool for retail traders, enabling you to trade a variety of markets and sectors individually or with options. They are so useful, it’s hard to know what we would do without them in the current markets.
ETFs are most useful because they give you access to certain asset classes, such as commodities, and give anyone the ability to implement strategies previously available only to larger investors. ETFs can also reduce volatility, although for options traders, volatility is part of the game and has a place in many strategies. But that place may be best explored after you’ve taken care of your longer-term financial goals.
An exchange-traded fund ...