But shares of companies in both sectors are under pressure. For example, most integrated oil companies have slashed their sales and earnings estimates, with BP (NYSE: BP), Sunoco (NYSE: SUN) and Chevron (NYSE: CVX) currently trading near their 52-week lows, despite oil prices being higher now than two months ago. 

And raw materials companies like Freeport McMoran (NYSE: FCX), a major copper and gold producer, and a winning pick in my LEAPS portfolio, have seen noticeable near-term weakness in share price. 

So it’s all doom and gloom, right? 

Nope. Despite the bad news - and contrary to what you might hear from the mainstream financial media - there is money to be made. 

And you can do so by adapting your portfolio to the market’s new reality… 

Sell… Sell… Sell! But Not In The Way Cramer Wants You To 

That new reality means you should position yourself as a seller, not a buyer. 

But not a frantic, head-for-the-exits seller of stocks… a seller of options. 

As I scan our portfolios, the two most effective investment strategies at the moment are: 

• Selling Covered Calls: Raking in money from the high premiums that exist as a result of above-average market volatility.
• Selling Put Options: Getting paid to buy stocks at the price you want - again, thanks to volatility. 

The covered call strategy works particularly well because you can accomplish two things: 

• Own the stock and position yourself for a sustained recovery in share prices.
• Use volatility to make money while you wait. 

And because of higher volatility, you can get fat premiums from selling calls that are quite far out-of-the-money. 

Let’s take a company I mentioned a moment ago as an example - Freeport McMoran…
 

Take A “LEAP”… Bag Some Cash 

At the moment, you can sell the August 2009 (about 120 days from expiration) $60 calls for around $1.20 a contract. 

To get your shares called away, Freeport would have to increase by more than 50% from current levels. Of course, a high option premium like this implies that Freeport has a decent chance to make that target. 

In this regard, a Freeport LEAP option would also make sense. LEAPS are long-term options that allow you to participate in the rise and fall of share prices at a fraction of the cost of owning the actual shares. 

In this case, you’d sell a Freeport LEAP put option to collect the fat premiums and position yourself to own Freeport at a lower price, thus combining a put strategy with a LEAP strategy. 

Regardless of which strategy you follow - and we have explanations for all of them in our free Smart Profits Report archives - the worst decision you can make right now is to do nothing while the market is begging you to take advantage of its schizophrenic behavior. 

Karim Rahemtulla