11 Minute Read

Tackle Today: Heed the Volatility Cycle

November 16, 2021

By | No Comments

≈ Expansion and compression.

Traders,

Did you know volatility moves in cycles just like price? It’s actually even simpler, consisting of two phases: expansion and compression. Here’s the gist. Prices move between periods of expansion and compression. Big moves are followed by small moves and vice versa. There can be a fair bit of noise along the way, but ultimately these are the two primary phases that volatility traders care about.

Volatility expansions are what occur during breakouts. When prices depart a consolidation zone, they usually see strong momentum – like a coiled spring that finally releases its pent-up energy. Think of the recent breakout and surge seen in the Russell 2000 Index. Alternatively, after a stock has made a large move, it typically runs out of gas and treads water for a while. The expansion ends, and compression begins.

Notice what we’ve seen over the past week. Overbought and otherwise extended indexes paused for a breather. They didn’t pull back aggressively, nor did they keep ripping.

The ideal delta-neutral, volatility-based trades take place at turning points of this cycle. Iron Condors are best placed as an expansion gives way to compression. And, long strangles and other bi-directional trades are most attractive when a period of compression is morphing into expansion.

#TeamTackle


Upcoming YouTube Webinar: Swing Trading 101 with Matt Justice – November 22nd 2021, 8:30 PM EST

Join Coach Matt Justice in this fun and informative webinar that will teach you everything you need to know on the art of swing trading. Attend this event to open your eyes to the real income potential of options trading and stock trading.

Topics Covered:

✅ What is Swing Trading: Definition, Types of traders, the 3 Steps to Swing Trading and the 3 pillars of Swing Trading

✅ Types of Trends

✅ Uptrends: Price cycles, higher highs and higher lows, Core 123 pattern

✅ Downtrends: Price cycles, lower highs and lower lows, Core 123 pattern

✅ Support and Resistance

✅ Swing Trading System Rules

Click on the button below to go to YouTube and set a reminder so you won’t miss it when Coach Matt goes LIVE.


Chart of the Day: Consumer Staples ($XLP)

Chart of the Day: Consumer Staples ($XLP)

The Consumer Staples sector (XLP) broke out on Monday. ‘Twas only a few pennies, but still. Check out the diagonal spread built during the Options Report video if you want to see how to lever up and generate some sweet cash flow returns.


Video of the day: Gino’s Gems – $ARHI3M-$ARLO3M Thinkorswim Indicator (ARCA Exchange)

In today’s Gino’s Gems, Coach Gino Poore talks about one of his all-time favorite #technicalindicators on #ThinkOrSwim: The $ARHI3M-$ARLO3M. This indicator measures new highs made minus the new all lows for just the past 3 months on more than 8k stocks traded on the ARCA exchange. It consists of a trend strength indicator that shows who is really winning the battle: the bulls or the bears. Check it out!


Today’s line up

Tales of a Technician: When do I Buy Stocks for the Long-Term?

We’re having all sorts of fun in the Team Phoenix Discord channel and I wanted to elaborate on my answer to one of the questions I received from my pal Mohammed.

The gist of it was this: “When is a good time to add stocks to my long-term portfolio, and what is your suggested strategy?”

Traders Lounge 11 PM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

The Coaches Show 8:30 PM EST

This is our weekly MasterMind group. Join the coaches tonight, 8:30 PM EST to discuss the markets and help you prepare for the week.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.


Tackle Trading: Financial Freedom is a Journey. Sign up now for a 15-day free trial.

Financial freedom is a journey

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.


Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.

Chart Modal

Tackle Trading

Book a FREE Consultation

Sign up for a free consultation to build your Educational Plan.