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Surviving this Volatility Environment

There are very few places on the Earth in which life can actually survive. In fact, it's pretty easy to claim that most of the time, mother nature is actively trying to kill us and all life. However due to how organisms adapt, there are a few cases in which biological life can survive, even in the most extreme conditions.

Over a mile under the ocean, between two tectonic plates in the Indian Ocean, there are hydrothermal vents that bring up super hot, chemically rich water from the earth. Somehow, there is life here that takes the conditions they were given and they thrive off it.

The current market volatility is not structurally healthy. As I've said in the past, volatility often begets volatility. The easy trade of the past 3 months are over, and those who grew accustomed to the buy everything model will be punished, and those that put on the right hedges will be rewarded.

Equity options give us a way to play this mess in a fashion that keeps your risk low while still exploiting what most would consider a bloodbath. Volatility trading seems like a terrible idea on a bright, sunny day where it's partly cloudy and 72 degrees out. But sometimes the market turns into one inhospitable environment. Figure out the strategies you need to thrive here so you can preserve your financial and psychological capital for when it gets easy again.

by Steven Place

Steven Place is the founder and head trader at investingwithoptions.com/