As you’d expect from a former market-maker on the London Stock Exchange, Imran’s personal investment process is quite advanced.

Like anyone else, he holds a basket of assets in his long-term portfolio. But unlike many investors, Imran uses options to trade around those long-term holdings — earning income and hedging his positions along the way.

• If he’s long an asset, Imran will sell calls or with a strike price above the underlying, generating short-term income as long as the stock doesn’t surpass that strike. 

• Conversely, he’ll use puts and spreads to hedge against any inevitable downturns for his holdings.

On a broader scale, options give Imran a clearer view of the entire market. Here’s how:

Imran constantly tracks options flow — a trading tool used to analyze institutional options activity. These are trades from highly sophisticated investors that can move markets.

• “[Options data] is a way of honing in on the sophisticated end of the market to get a read on what those players are doing, which can help guide your own thinking about the market,” says Imran.
• “You might be bullish or bearish. But if the options market is diverging from that and you’re seeing flows that reflect the opposite, it’s very useful to know that.”

Options can help gauge future risk… or lack thereof. Options data helps Imran notice shifts in sentiment and things like risk events that may be coming down the pike:

• “Then you can investigate and see what the market is anticipating, and there’ll be opportunities to trade options around that.”