Volatility Is The Great Equalizer

March 27, 2020

There’s a lot of uncertainty still hanging in the air, but we’re starting to see hope.

The Dow Jones Industrial Average rallied 20% from Monday’s lows.

This bounce has helped ease some pain, but that doesn’t mean we are back in a bull market.

The fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX), at 63 - continues to be an extreme level.

After that bounce, the market is taking a breather today waiting for President Trump to sign the 2 trillion stimulus bill.

The elevated volatility is like big waves rocking the boat back and forth.

The good news is that the market has priced in most of this uncertainty.

I do expect more downside risk as more negative headlines are still to come.

We’re in a bear market, which means every single rally must be sold.

We must trade the market we have today and be in the best position for tomorrow's opportunity.

As I mentioned in last week’s update, our game plan for success is to play both sides, but have a downside bias in the market.

Wall Street or big banks are not built for that and why volatility is a great equalizer.

This type of market action allows the little guy an opportunity to thrive.

We want to have some long positions due to the fact that there will be large spikes.

But as I’ve been saying, those spikes will be sold off.

That means we see our positions likely the red, then turn green as we let the market come to us.

That is exactly how we are positioned right now.

Let’s talk about our current positions…

Portfolio Update

  • On Tuesday, buy-to-open the Nordsrom Inc. (NYSE: JWN) April 17, 2020, $10 put (JWN200417P00010000) up to $0.45 per contract or better, for the day

Right now, our open positions are:

  • Vistra Energy Corp. (NYSE: VST) April 17, 2020, $25 call (VST200417C00025000)
  • Glu Mobile Inc. (NASDAQ: GLUU) June 19, 2020, $7 call (GLUU200619C00007000)
  • Huntington Bancshares Inc (NASDAQ: HBAN) May 15, 2020, $8 call (HBAN200515C00008000)
  • Nordsrom Inc. (NYSE: JWN) April 17, 2020, $10 put (JWN200417P00010000)

This is an uncomfortable time in our lives, but there’s no better time to be active in the market than it is today.

Many of my largest gains occurred during the 2008 financial crisis. 

We'll stick to the system and come out ahead.

As always, keep sending your questions and feedback to [email protected]

My team and I will have a new trade for you on Monday morning.

To your wealth, freedom, and options!

Joshua M. Belanger
Joshua Belanger is founder of CounterVest and the editor of Hot Money Trader. He has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%