The market has been in full-blown panic mode lately. The S&P 500 is down about 9% today from its highs, but individual stocks have taken an even bigger beating.
JPMorgan (JPM), one of the most stable names all year, dropped from $280 to $230 in a matter of weeks. And we’re not talking about some speculative tech stock — this is one of the biggest banks in the world.
Everywhere you look, there’s talk of a bear market and recession.
Could it happen? Sure. But are we there yet? I don’t think so.
Right now, this sell-off feels more like a massive scare than the start of a prolonged downturn. There’s just so much uncertainty — tariffs, inflation, interest rates — and that’s keeping investors on edge.
The latest CPI and PPI reports are in, and inflation is better but still a concern. That all but guarantees the Federal Reserve won’t be cutting rates next week. If anything, this could mean more hawkish language from the Fed, which could rattle markets even further.
The market doesn’t like uncertainty, and right now, we’ve got nothing but uncertainty.
How to Trade This Volatility
In times like this, it’s easy to get whipsawed. If you’ve been trying to buy the dip, it hasn’t worked. If you’ve been shorting weakness, you’ve probably gotten caught in some nasty reversals.
The swings have been relentless.
That’s why I’m leaning into a two-way trading strategy right now. Instead of trying to predict the next big move, I’m positioning myself to win whether the market goes up or down. The key is targeting stocks or ETFs that are seeing extreme volatility and using options to take advantage of it.
Take the Nasdaq 100 (QQQ), for example.
It’s been all over the place lately. If you’re just buying calls or puts, you’re basically flipping a coin. But by structuring trades that profit from big swings in either direction, you’re putting the odds in your favor.
This approach isn’t about trying to time the exact bottom or top. It’s about recognizing that volatility itself is the trade.
And right now, that’s the only thing this market is guaranteeing.
Editor’s note: Here’s a step-by-step guide on one way to trade volatility.
One Way to Use Two-Way Options
Instead of trying to guess whether the market is about to rip higher or collapse lower, let’s discuss one way you can profit from a significant move in either direction. The key is using a long strangle, which involves buying both a call and a put option at the same time.
Choose Your Ticker
Pick a stock or ETF that’s experiencing high volatility. Let’s say the Nasdaq 100 (QQQ), S&P 500 (SPY) and Russell 2000 (IWM) are all moving aggressively. These are great candidates because they have liquid options with tight spreads.
Select Your Expiration Date
You want to give the trade enough time to work, but not so much time that options premiums eat into your potential gains. A good sweet spot is 7 to 14 days out.
Pick Your Strike Prices
- Call option: Choose a strike price slightly above the current price.
- Put option: Choose a strike price slightly below the current price.
- Look for options trading under $2 per contract to keep costs manageable.
For example, if QQQ is trading at 400, you might buy:
- A 405 call
- A 395 put
- Both expiring in 7 to 14 days
Set Your Profit Target
With this strategy, you don’t need a massive move. You’re aiming for a 50% gain on either leg. If the market makes a big swing, one of your options will increase in value while the other loses — but your winning option should more than make up for the loss.
Set a Stop Loss
If the market stays flat and neither option moves much, you want to cut your losses before time decay eats too much of your premium. A good rule of thumb is to exit if the total trade is down 30% to 40%.
Let the Market Work for You
Once the trade is in place, you don’t need to sit and watch every tick. Either the market makes a move, and you take profits, or it stays stagnant, and you cut the trade before the options expire worthless.
This approach works best in markets like this, where wild swings are the norm. Instead of fighting the volatility, you’re using it to your advantage.
Graham Lindman
Graham Lindman Trading
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
Important Note: No one from the ProsperityPub team or Graham Lindman Trading will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. Roger Scott’s System That Delivered 300+ Wins Just Flagged This Q2 Opportunity
Roger Scott’s Q2 Market Outlook, “The Road Ahead,” reveals his No. 1 stock pick that’s positioned to outperform everything else this quarter.
While most investors focus on headlines, Roger’s institutional tracking system shows where the smart money is really flowing for Q2.
