Using Options to Bide Your Time

What indifference a week makes. If anything, the malaise and discontent I spoke of last week has only deepened as the issues confronting traders -- the election, rising interest rates, declining earnings growth and the ubiquitous orange cloud of terror -- continue to hang over the market as we enter the dog days of summer.

Option trading volume on Monday, the day we went on orange alert, was just 3.1 million contracts, the second-lightest day of the year. Only the Friday before Memorial Day generated less activity.

Unfortunately, this lack of options activity is a reflection of the low volume and disinterest plaguing the underlying market and it has bearish overtones for stocks in the near term. While bulls need growing volume and more new investment dollars to take prices higher, the bears know that stocks can fall of their own weight simply from a lack of demand. No volume is necessary. ...