" Consider Alphabet. Shares recently fell from about $325 to $280. The stock is down 10.5% this year, though it has more than doubled over the past three.

For investors with long time horizons, episodic short-term volatility is an opportunity for time arbitrage. This strategy monetizes short-term stock weakness by selling options with an elevated fear premium, benefiting long-term investments. It expresses a belief that blue-chip stock weakness, over long periods, is usually a buying opportunity, provided the stock can be held for at least three to five years and ideally much longer.

With Alphabet at $280.03, sell the January $270 put for about $10.60.

If Alphabet is below the strike price at expiration, buy the stock. If the stock exceeds the strike at expiration, the put premium is kept. The risk is the stock falls far below the strike, which could happen if something else makes investors panic. To manage the risk of further declines, “leg into” the trade. If you want to buy 900 shares, for instance, sell three puts with different strike prices and similar or different expirations.

Because we think AI will profoundly change the world, and that anything that poses major changes to the status quo is definitionally volatile, a broader approach is also worthwhile. The State Street SPDR S&P 500 exchange-traded fund will almost certainly advance when AI fears lessen. To pre-position, buy bullish call options that expire in one to three months and are a bit higher than the ETF’s price. If you also sell puts on the ETF, you should raise enough money to pay for some or all of the call.

Don’t let volatility scare you. Over time, embracing it creates wealth."

barrons.com - Alphabet stock options trading