How to Play Headline-Driven Stock Market Volatility

by | Feb 22, 2022 | Options

Headline-driven stock market volatility is driving Wall Street right now.

The ugly headlines are rolling in from Eastern Europe, and it’s making things hard for everyday traders looking for gains.

Volatility and options premiums are up and institutional order flow is down — which means the “smart money” is on the sidelines….

There’s nowhere to run to for safety — bond yields are down and gold is already near its 52-week highs.

Our Wiretap Alerts strategy was able to roll with the sour mood and closed wins at Tuesday’s open with downside plays on Lucid Group Inc. (Nasdaq: LCID) and Beyond Meat Inc. (Nasdaq: BYND) puts. Upside wins have been tougher to come by…

With Tuesday morning’s 9.5% pop on the Macy’s Inc. (NYSE: M) earnings beat, Weekly Blitz Alerts pulled in a 16% gain on the second leg of our March 18, $28 strike calls.

The stock market is focused on one thing right now, and there’s no way to completely avoid this headline-driven market volatility…

But that doesn’t mean we can’t trade it.

How Headline-Driven Market Volatility Impacts Options Trades

When news headlines are driving the stock market trend — this trend being volatility — the only thing I want to trade right now is earnings.

After last week’s sales report and Macy’s strong earnings, traders looking to keep the retail train rolling have TJ Maxx parent TJX Companies Inc. (NYSE: TJX) and Foot Locker Inc. (NYSE: FL) reporting this week…

Anyone looking to play the downside have plenty of meme stocks with weak charts… Names like Clover Health Investments Corp. (Nasdaq: CLOV) and Etsy Inc. (Nasdaq: ETSY) report Wednesday after the close.

But traders need to be aware that the winners are going to be muted by market volatility, and the misses are likely headed to $0…

With volatility high, selling options premium is one strategy traders can use to weather this headline-driven stock market storm…

 Traders beware… While premiums are juicy, the bid-ask in some of these options chains are wide enough to drive a truck through — and getting unreliable fills with already limited profits can be risky.

 The other way to play is to limit risk by keeping position sizes small.

 Either way, choppy markets like this are no time to get married to a position. Get in and out.

 Everything is overshadowed by geopolitics…

 Even good news like Tuesday’s Advanced Micro Devices Inc. (Nasdaq: AMD) stock upgrade saw a 3% pop in the opening hour… only for those gains to evaporate before lunch.

 If a trade goes green, take your profits and get away from your screen.

 Check out the video below and let me show you how I’m dealing with the headline-driven stock market volatility.

P.S. Back on Jan. 14, Joy of the Trade’s Jeff Zananiri warned that a big sell-off was coming… Days later, the market tanked and he collected 352% on DGX. 

Then again on Jan. 28, he predicted a rebound rally for the week… And he collected 30% on TXN and 11% on XOM — both overnight!

And now, Jeff has his eye on something he says pales in comparison to what we’ve seen the past month…

Uncover His Biggest Prediction Yet!

WRITTEN BY<br>Lance Ippolito

WRITTEN BY
Lance Ippolito

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