Conclusions

Options are sufficiently versatile that most individual investors can find a suitable strategy to adopt on a recurring basis. If an investor prefers to time his/her trades, then the strategy can be used at the appropriate time.

The main point to recognize is that an investor in John’s situation is not comfortable with current risk. That’s the #1 problem that must be solved. John could do one of the following:

• He could do nothing, remain worried, and hope for the best. This is a poor choice because hope is not a strategy.

• He could bury his head in the sand and pretend that markets always rise on average, and that there is nothing to fear.

• He could turn to the services of a professional financial advisor or financial planner. By taking this approach, John may not save any money in a market meltdown, but at least he can gain some consolation by telling himself that someone else is to blame for any financial losses.