When Trading Volatile Stocks Works Out

Many retail traders are naturally scared of trading volatile stocks. There have been so many instances in the past when extreme market volatility simply took many to the cleaners and many are still dipping their hands in cold water after getting them burnt severally. However, there are a few occasions when trading volatile stocks might be a good idea.

Of all possible strategies you will hear on trading volatile stocks, the one which stands out may be the selling of vanilla options.

Why Selling Options on Volatile Stocks?

What does it mean when we say a stock is volatile? It means that there are wild swings of price action and there is no definable trend. Price action is very choppy and unpredictable. For instance, the Dow plunged 1000 points on market open on Black Monday of August 24, 2015, only for it to gain it all back and eventually track down again to close the day more than 520 points lower. If a trader were to attempt trading this asset even with pending orders, it is more than possible that losses may have followed.

trading volatile stocks

If you look closely at today’s markets, it will become obvious that volatility is far from being over. The FOMC meeting that took place in the 3rd week of September to determine if US interest rates should be increased showed that volatility can occur regardless of which direction the decision takes.

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easyMarkets
With over a decade of trading expertise and 100,000 fulfilled clients in 160 countries worldwide, easyMarkets will tick all your boxes whether you are a new or experienced trader, affiliate or introducing broker. Trade currencies, commodities, metals, vanilla options and indices from one place without the jargon, complicated offers and confusing terms! Welcome to the exciting world of trading. Welcome to easyMarkets.
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easyMarkets

easyMarkets

With over a decade of trading expertise and 100,000 fulfilled clients in 160 countries worldwide, easyMarkets will tick all your boxes whether you are a new or experienced trader, affiliate or introducing broker. Trade currencies, commodities, metals, vanilla options and indices from one place without the jargon, complicated offers and confusing terms! Welcome to the exciting world of trading. Welcome to easyMarkets.

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