How to Exploit Market Makers When They Overprice Stable Stocks

🚨 I’ll be live at 10 a.m. ET with Graham Lindman🚨
We’ll cover the super bullish 12-month outlook, the quiet before the earnings storm, the line in the sand for the S&P 500 and more [tap to join us for Opening Playbook]

 

Let me share something most traders completely miss during high-volatility periods.

When the VIX is elevated, as we saw Monday with the index holding firm above the 30 level, everyone’s focused on which stocks are moving the most. They’re chasing the biggest movers and highest implied volatility (IV) names, trying to capitalize on all that chaos.

But here’s the thing: There’s actually a better play hiding in plain sight, and it’s the exact opposite of what most people are doing.

On Monday, we continued to see the market shift into a more defensive posture, with rotation showing up in staples, energy and a few other protective areas. When that happens, pockets of stability begin to appear even as broader volatility stays elevated. That mix creates a pricing disconnect most traders never think to look for.

When the VIX is high, market makers raise pricing across all stocks. Even names that aren’t moving much individually get hit with higher option premiums simply because the overall market is volatile. That creates an opportunity.

The biggest challenge for many options traders is paying for premiums based on a stock that was moving aggressively, only to watch it slow down afterward. Premiums implied one level of movement, but realized movement dropped much lower.

Flip that dynamic on its head and you get a setup where premium stays inflated even if the stock isn’t making the kind of moves the market is pricing in.

The Apple Example

Apple (AAPL) provided a clear illustration of this dynamic during Monday’s session. While the broader tech sector was wrestling with wild swings, AAPL’s average true range (ATR) didn’t spike nearly as much as its peers. It traded with relative stability around the $258 level, even as other tech names saw significant intraday moves.

Here’s the key: Even though AAPL itself wasn’t moving as much, you were still getting elevated premium because the overall VIX remained high.

When AAPL’s ATR stays controlled while the market prices in a much larger move, you build a cushion. The stock’s behavior gives you room while the market’s pricing gives you payment. That combination is rare and extremely valuable.

You get the benefit of inflated premiums without the same level of stock-specific risk. It’s like getting a boost on your trade simply because of broad market conditions.

How to Use This Strategy

Look for fundamentally sound stocks you already want to be bullish or bearish on, names you’d trade anyway based on your analysis and directional view.

Within that group, focus on stocks showing relative stability compared with broader volatility. These are the names where you’re still getting elevated premiums because market makers are pricing everything higher, but the stock’s actual movement is slowing or staying controlled.

You’re essentially getting paid more for taking on less actual risk.

This isn’t about chasing the highest IV names or the biggest movers. It’s about spotting the calm areas that benefit from the storm. When you combine directional conviction with a stable ATR in a high VIX environment, that’s when you get optimal trade construction.

Most traders never look for it, which is exactly why the edge exists.

Now don’t forget to join us at 10 a.m. ET weekdays for Opening Playbook, and at 3:30 p.m. ET Closing Playbook!

Nate Tucci
Tucci Trades

Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!

• Telegram: https://t.me/nate_tucci
• YouTube: https://www.youtube.com/@NewMoneyCrew

Important Note: No one from the New Money Crew team or Tucci Trades 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. Want Free Access To My Top Income Secret?

You’ll see how to target $250, $500 and even $1,000 on a $2,500 stake every single week from the market, without trying to predict the direction.

Get Free Access Here

Disclaimer: We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading. Past performance is not indicative of future results. While we have used the Income Machine with great success, we cannot guarantee future results. What you will see today are some of the best examples over the last few months. There were bigger winners, smaller winners, and losers. Since the Income Machine is a tool for traders and not a trading service, profits and performance will vary among users.