By Parke Shall
There is no doubt that next week is going to be volatile for the markets. When we know there is going to be volatility, the best thing to do is to have a plan. We know there is going to be volatility because of the election and the market has certainly been pricing in some very real volatility that you can easily see by looking at option prices on the indices.
At the end of the week last week, it cost an astounding $5.73 to buy the SPY 208.50 straddle that expires just one day after the election. To buy the same position that expires 2 days later, at the end of the upcoming week, you'd have to pay $6.69.
That is the market telling you it expects the indices to move between 2.9% and around 4% just based on the election alone. For perspective, a 2.9%…
