E*TRADE Study Reveals Divergent Views Regarding the Markets and the Economy
Amidst volatility, experienced investors are drawing a line between the health of the
- The majority of investors are bearish this quarter — at the highest level in more than a year.
- "Dazed and Confused" remains the movie title that best describes how investors personally feel about the market this quarter.
When considering the
- Four out of five investors rate the
U.S.economy as fair, good, or great, while only one out of five take a decidedly negative view.
- Nearly half of all investors agree the
U.S.economy is healthy enough for the Fed to enact additional rate hikes this year.
"A bearish outlook on the stock market can be expected given the performance we have seen at the start of this year," commented
- Put options may protect against downturns. Investors with a long-term bullish view, but who are also worried about periodic market downturns, may choose to hedge their long positions by purchasing put options (the ability to sell assets to another investor at a predetermined price and date). Put options may offer protection against downside risk in the event that the underlying position decreases in value.
- Covered calls may provide income. Writing covered call options (when an asset owner sells the ability for another investor to buy the owner's assets at a predetermined price and date) may generate income if the price of the underlying asset remains relatively stable or decreases in value.
- Bear spreads can be a tool to help balance risk and reward. For investors who are bearish about a particular stock or the overall market, a bear spread (the simultaneous purchase and sale of options that expire on the same date) can be used to reduce downside risk, while limiting upside potential.
Visit E*TRADE's Newsroom for the full Q116 StreetWise study results.
For useful insight from
About the Survey
This wave of the survey was conducted from
|When it comes to the current market are you?|
Which of the following do you think is most likely to occur in the next
|Stay basically where it is||20%|
|If you had to pick a movie title that best describes how you personally feel about the market right now, which would it be?|
|Dazed and Confused||34%||38%||29%||25%||27%|
|Fear and Loathing in
|Singin' in the Rain||7%||9%||13%||14%||14%|
|How do you think the
|Top 2 Box||33%||32%|
|Bottom 2 Box||20%||20%|
|Agree (Top 2 Box)||47%|
|Neither agree nor disagree||28%|
|Disagree (Bottom 2 Box)||25%|
(1) Options transactions are complex and involve a high degree of risk, are intended for sophisticated investors, and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options before you begin trading options. There are specific risks associated with covered call writing, including the risk that the underlying stock could be sold at the exercise price when the current market value is greater than the exercise price the call writer will receive. Also, there are specific risks associated with buying options including the risk of the purchased options expiring worthless. Moreover, there are specific risks associated with trading spreads including substantial commissions, because it involves at least twice the number of contracts as a long or short position and because spreads are almost invariably closed out prior to expiration. Because of the importance of tax considerations to all options transactions, the investor considering options should consult his/her tax adviser as to how taxes affect the outcome of each option strategy. Commissions and other costs may be a significant factor. An options investor may lose the entire amount of their investment in a relatively short time.
The information provided herein is for general informational purposes only and should not be considered investment advice. Past performance does not guarantee future results. ETFC-G
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