Volatility in the Stock Market
Here's how TheoTrade has traded with the volatility in the stock market. This week we closed out winning trades in AMZN, EEM, and SPX. Let's look to next week and what we expect. There is a strong possibility of there being a little bit more of a short covering rally before the next leg down happens. As we look at the implied volatility in the indexes and key industries there are a few things we need to take note of. First, the SPX implied volatility is at the lowest this coming week as it has been since the beginning of the year. Monday will not be the time to sell premium in the indexes. Look for strategies that can take advantage of an increase in implied volatility thoughout the week. However, we look at financials with the XLF. The implied volatility has come off it's highs, but still abnormally high. We can compare to a high volatility stock like GOOGL and we will see the XLF, a basket of big financial stocks, has as high implied volatility as one high tech stock. Watch this important weekend edition now.
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