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Although I did not fully realize it at the time, my personal drive to get licensed in every facet of the capital markets–to study and become qualified in the options markets as well as the commodity futures markets–became a critical foundation to my career.
To lack proficiency and qualification in trading in derivative instruments was something that one could, perhaps, get away with a few decades ago. It is not now.
The last 12-18 months have yielded good returns, especially in the last couple of quarters. Clients are invariably asking whether they should cash out and move to the sidelines.
The challenging question, of course, is, “If I get out, when do I get back in?”
This is where a well-informed and careful application of derivative strategies can, to varying degrees depending on the nature and structure of a portfolio, provide a level of insurance for a portfolio without triggering sell orders and moving to cash.
I learned early in my advisory years that options writing strategies could not only lock in gains, but increase portfolio income through the earning of premiums.
Related: It's Time to Commit to the Most Intensive Economic and Market Analysis You've Done for a While
Yes, the derivatives markets are replete with risk—if you are a buyer of risk—but if you are a seller of risk, to not be able to utilize these markets is to leave opportunities on the table.
If you work for a larger firm, being fully qualified in derivatives will also open up significant career opportunities in compliance and in management.