Make The Most Of Your Money (And Time) During Low Volatility Markets

low volatility markets

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In times like this, where volatility is extremely low, great trades can be far and few between.

As option sellers, we like to sell premium when volatility is high. When markets are calm, it's hard to sit on your hands and wait for good trades to come around.

We start thinking "creatively" about new ways to invest. . . Should you try other exotic strategies just to make a buck or do you patiently wait on the sidelines like we've suggested before?

Well, here are a couple of things you can do with your money as you sit around and wait for those high volatility opportunities.

1) Stay Active With Directional Debit Spreads

First, you can try some directional debit spreads, either buying put debit spreads or buying a call debit spread. Make a directional bet on the market and just keep yourself active and involved.

These aren't meant to be high probability trades, but rather 50/50 bets on pure direction. This is also a great way to use some of the money in your portfolio, but you don't want to overextend yourself by trading too many of these option strategies.

Keep the trade size small (as always).

2) Invest In Your Trading Education

Use your idle money to invest in your education. Do something to learn and grow for God's sake!

Whether you choose to invest in a membership here at Options Alpha or any other membership out there, use some of your money now that's sitting around and invest in learning more about options trading.

There are hundreds of courses, tutorials and coaching programs out there. Pick a couple and see what someone else has to say about trading. This is an exercise in broadening your general knowledge and exposure.

Remember that if you are not actively moving forward and learning you're falling behind. This is true even more so today than ever before.

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3) Buy A Good Book To Read

Who's to say that that a book that cost twenty dollars can't save you thousands of dollars later on in your life?

My wife hates how much I spent buying books when I got started, but I was on the hard path to learning. Just because you're spending money on books doesn't mean that you're not investing!

Get some recommendations from friends or look online for ratings of top options trading books.

4) Try A New Brokerage Account

With all that money sitting in your bank account, it might be good to use a couple thousand dollars and open up a new brokerage account to test other brokers.

Who's to say that your current broker is the best around, or maybe another broker has a great feature that you just haven't tried out?

Many of you know that I'm a huge fan of thinkorswim from TDAmeritrade so if you haven't tried them out nows the time to get started. Plus you can earn $50 just for mentioning my name when you sign up!

You're not trading that much because there's low volatility so move your money around and see if you can get some special promotions.

5) Count That Cash Big Money!

Finally, if you don't have anything else to do with your money you can just sit there and count it.

Honestly, I've never done this but always wanted to go to the bank and take out a couple thousand dollars in $20's. Might be fun who knows.

It might feel good just seeing that money in your account and it might spark you to save more so that you can continue trading.

Be Patient - Volatility Will Return

Again, we have to remember that to be successful in this business; you have to be patient and pick your entry points.

Low volatility environments don't last forever, and there will be opportunities to make trades. It's the people who try to force strategies into the market that end up losing long term in this market.

So sit back, relax, and enjoy your money while you have at; at some point, you'll probably lose it on a trade or two, but that's what this business is all about, right?

About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.