In the Face of High Volatility, Stick with ETFs and Big-Name Stocks
When volatility is high, consider sticking with exchange-traded funds (ETFs) and the big-name stocks. All of the Dow Stocks are also in the S&P 500, and we have them sorted them from the most- to the least-volatile. They might be boring, but statistically speaking, reduced return variation correlates with lower stress. (Click on the image below.)
Wednesday, April 16:
Pre-Open: ASML (ASML)
Thursday, April 17:
Pre-Open: UnitedHealth (UNH), Taiwan Semiconductor (TSM)
Post Close: Netflix (NFLX)
Tuesday, April 22:
Pre-Open: Lockheed Martin (LMT), RTX (RTX), GE Aerospace (GE), Verizon (VZ)
Post Close: Tesla (TSLA)
Wednesday, April 23:
Pre-Open: Philip Morris (PM), Boeing (BA), AT&T (T)
Post Close: Lam Research (LRCX), Chipotle (CMG), Texas Instruments (TXN), IBM (IBM), Newmont (NEM), ServiceNow (NOW)
Last week, our download was so popular that we decided to repost it. (Click on the image below.)
Nike (NKE), one of the stocks hit hardest by the tariff news, is sitting at 52-week lows (which is going back to prices not seen since 2017). Volatility remains high with an IVR at 64 and a monthly IV at 54.5%. If you think we might be at or near lows, ou could consider selling the 52.5 put in MAY trades at over $2.00 while using only $875 in buying power.
Once upon a time the phrase "don't fade the mouse" was a thing—but not so much recently with stock in Walt Disney (DIS) down to near 52-week lows. With its earnings report coming in early May, there’s a nearly 9-point volatility differential between the May and June expirations. If you are bullish, a call diagonal long the 90 June call and short the 95 May call is a cheap way to play into the wide volatility spread.
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Michael Rechenthin, Ph.D., (aka “Dr. Data”), managing director of research and development, has 25 years of trading and markets experience. He’s known best for his weekly Cherry Picks newsletter. On Thursdays, he appears on Trades from the Research Team LIVE.
Nick Battista, tastylive director of market intelligence, has a decade of trading experience. He appears Monday-Friday on Options Trading Concepts Live. On Wednesdays, he co-hosts Johnny Trades. @tradernickybat
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