Options Investors Face Challenges in a Volatile, but Flat, Stock Market

The past six months or so have been rough for buyers of stock options. While the market has been volatile, it made no sustained move up or down, which is an especially tricky scenario for novice options buyers.

If they want to make a nice profit, options investors can’t wait patiently while the market trades sideways. That’s because options give the owner the right but not the obligation to buy or sell a security—a stock or exchange-traded fund—at a predetermined price for a limited time. If the stock or the ETF fails to move sufficiently in the desired direction before the option contract ends, it expires worthless.