TJ 90: Volatility and cash flow trading

With the impending interest rate hike later this year in either June or September, preparing for what will happen in the market will help your portfolio survive the initial rockiness of such an announcement. Such preparation can pay off particularly well if you're a cash flow trader: rising interest rates bring increased volatility to the market, and increased volatility drives options pricing higher. If you're selling options and placing covered calls, this is great news; it's just a matter of waiting for the Fed to actually act and initiate the interest rate increase.