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Retail investors see volatility through 2010


The vast majority of retail investors (90 per cent) are seeing market volatility at or above its current level over the next three months, according to a survey by optionsXpress, a provider of trading technology.

Respondents remain divided on the 2010 market outlook, as half believe the S&P 500 will trade at or below its current level, and more than 60 per cent believe trading options is the best way to profit from the index over the next six months.

"In light of the volatility retail investors are expecting, it’s important to re-visit strategies and consider expanding portfolios beyond equities. Building options and futures into an overall investment strategy can be a great way to hedge against risk in an unpredictable market and attempt to draw revenue from a market where equities simply don’t appear to be generating returns," says David Fisher, chief executive of optionsXpress.

When asked where they see volatility in three months, ten per cent of optionsXpress traders responded lower, 40 per cent responded current level, and 50 per cent responded higher.

When asked what range they expected the S&P 500 to trade in 2010, 20 per cent responded above 1,250, 34 per cent responded 1,150-1,250, 19 per cent responded 1,050-1,150, and 27 per cent responded below 1,050.

When asked what they think is the best way to profit from the S&P 500 over the next six months, 61 per cent said they would use options and ten per cent would use S&P E-mini futures, while 12 per cent responded they would buy and hold index funds, ten per cent would trade S&P 500 ETF (SPY), and seven per cent said the S&P 500 will not have gains during the next six months.

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