Profit Off Volatility With Cboe Global Markets
In yesterday’s Trade of the Day, I asked…
Will December 2019 end a fantastic investing year with a Santa Claus rally? Or will 2019 end the way last year ended – with a massive market correction?
Well, this morning, we got a key component of that answer.
As I’m sure you know, President Donald Trump delivered the news that “the idea” of holding off on a U.S.-China trade deal until after the 2020 presidential election now has appeal.
As I’ve been reporting in The War Room, the market had priced in a Phase 1 deal for weeks – if not months – leading up to Q4. But today’s news completely undermined the market’s confidence that a deal will get completed before a new round of import tariffs are imposed on December 15.
In response, the Dow dropped more than 300 points before lunchtime. The Nasdaq dropped over 100 points.
Neil Wilson, chief market analyst for Markets.com, summed the market response up perfectly:
Markets simply aren’t priced for this; for a trade deal to be that far in the future – if one can even be struck at all. After weeks of making generally positive noises on a deal being very close, there is a real sense now that a deal is not so very near at all and markets need to reprice.
So once again, as traders, we find ourselves asking… How do we profit off this heightened level of market volatility?
For that answer, let’s refer back to a Trade of the Day issue I wrote on June 5 – because the best answer could be contained in this message:
In times of market chaos, you see heightened trading activity. This leads to larger trading volumes. And both of those things are great for the market exchange business model. In fact, we’ve been stressing this theme for weeks – and it’s been working beautifully.
Steven M. Sears (who writes “The Strike Price” column in Barron’s) supported this argument:
When institutional investors think the markets are going to convulse, they often buy the stocks of exchanges. Panic increases trading volumes, the argument goes. Exchanges make money each time someone trades, and they make even more money selling data to algorithmic trading firms that act on relationships and patterns often invisible to the human eye.
Add it all up, and its once again time to look at Cboe Global Markets (Nasdaq: CBOE).
Action Plan: Heightened periods of volatility always lead to stressful market environments – which is why Cboe Global Markets represents such a wise safe haven right now. The more trades that cross the tape (no matter whether they’re a buy or sell), the better Cboe Global Markets does.
Plus, Cboe Global Markets owns all of its proprietary trading data. Monetizing this valuable information represents a massive profit center going into 2020. If you’re worried about a repeat of December 2018, then Cboe Global Markets should be a name you’re adding to your defensive portfolio. Join me in The War Room today for real-time trading and invaluable trading information!
About Bryan Bottarelli
Bryan graduated with a business degree from the highly rated Indiana University Kelley School of Business, and his first job out of college was trading stock options on the floor of the Chicago Board Options Exchange. He was mentored by some of the country’s top floor traders in the heart of the technology boom from 1999 to 2000, where he learned to identify and implement some of his most powerful trading secrets. Now he shares his secrets with a group of elite traders. We will be republishing some of his highly sought after content from his free e-letter, Trade of the Day.