The Dow Jones Industrial Average dropped by about 200 points on Friday, falling 0.2% after President Donald Trump nominated Kevin Warsh to take over from Jerome Powell as Fed Chair in May. The S&P 500 also fell by 0.2%, and the Nasdaq Composite decreased by 0.3%. However, all three major indexes saw gains in January: the Dow rose 2.1%, the S&P 500 increased by 1.8%, and the Nasdaq went up by 1.9%. Verizon stood out with a 6.6% increase, thanks to adding 616,000 subscribers—the highest quarterly addition since 2019. In contrast, American Express dropped 3.1% despite a rise in revenue. Concerns about higher credit loss provisions and expenses affected investor confidence. ExxonMobil and Chevron both beat earnings expectations, even as they faced challenges from a global oil supply surplus.

Apple Stock Fluctuation

Apple’s stock decreased by 1.2%, despite reporting revenues that were 16% higher than last year. This drop was due to profit-taking and challenges in the tech sector. Silver experienced a sharp 21% drop from record highs, indicating a market correction. Nevertheless, silver still recorded a monthly gain of over 30%, fueled by geopolitical uncertainty and tight market conditions. Kevin Warsh’s nomination to lead the Fed introduces notable uncertainty, signaling potential for increased market volatility. We may see the CBOE Volatility Index (VIX), which hovered around 14 for most of January 2026, rise toward 20 as markets adjust to a possibly more aggressive interest rate strategy. Derivative traders might consider taking long positions in VIX futures or buying options tied to volatility-linked ETFs. Given that the market started the year strong, the current pullback offers a chance to safeguard gains. The aggressive rate hikes that began in 2022 put pressure on stocks, and Warsh’s nomination highlights those concerns. Buying protective puts on major indices like the S&P 500 (SPY) or Nasdaq-100 (QQQ) could be a wise move in the coming weeks. We can see a clear divergence between sectors that requires focused strategies. For strong performers like Apple, which is pulling back after strong earnings, writing covered calls could generate income while providing a little cushion against further declines. On the other hand, for weaker financials like American Express, which are feeling the impact of rising credit loss provisions, buying puts could protect against potential consumer distress. This is particularly relevant as Q4 2025 data indicated a small increase in credit card delinquencies.

Options Strategy in Action

Additionally, Verizon’s impressive subscriber growth makes it a candidate for bullish option strategies. Buying call spreads on Verizon could be a cost-effective way to invest in its upward momentum. Oil companies like Chevron, which remain profitable even with crude prices near $35, suggest they will trade within a defined range. This makes them suitable for neutral, income-generating strategies like iron condors. The 17% single-day drop in silver is a stark reminder of the volatility in precious metals. This environment is advantageous for strategies that benefit from large price swings, such as long straddles or strangles on the iShares Silver Trust (SLV). We anticipate this heightened volatility will continue as those who drove the price to record highs start to unwind their positions. Lastly, the dollar has strengthened significantly due to the prospect of a more aggressive Fed, a trend we expect to persist. Traders can take advantage of derivatives to bet on a stronger dollar, such as by buying call options on the Invesco DB US Dollar Index Bullish Fund (UUP). This also makes puts on currency pairs like the EUR/USD appealing, especially as it tests key support levels around 1.1900. Create your live VT Markets account and start trading now.

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