TastyLive: I May Have Found a Way to Stay Alive In This Market
Daily market volatility remains high, with 1% swings both up and down likely in the weeks ahead. That’s thanks to a volatility index (VIX) of about 20 or higher. For trading this environment, a nimble mindset remains key, since stocks can swing at any time on nearly any news.
For traders, having a wider strategy for playing these swings is helpful too. Many strategies exist that can help put the current market volatility into investor’s favor.
For instance, the use of options with 45 days ‘til expiration (DTE) can offer a more consistent return. With so many investors focused on 0DTE, or zero-day options, being wrong in a given day is less painful.
A longer-dated strategy allows for an option to lose premium over time.
The use of option strangles can work well for this timeframe. However, strangles can be more expensive, in terms of requiring more capital than other trades.
Using other option tools like an iron condor can boost returns with less capital up front. However, the overall potential returns are also lower.
With the market’s bigger daily swings, investors don’t have to swing for the fences daily. Using longer-dated options can capture the increased volatility now. And tools like strangles and iron condors can be used to consistently bring in steady returns in unsteady markets.