US indices show mixed performance as NASDAQ and S&P hit record highs recently
by VT Markets
/
Jul 18, 2025
Market Volatility Opportunities
The broader market shows strength, with two major indices reaching new highs. This indicates a positive trend. However, trading at these peak levels can lead to increased volatility, which opens up opportunities for option sellers. The CBOE Volatility Index (VIX) is currently around 13, significantly lower than the historical average of about 20. We see this as a good chance for premium selling strategies.
The recent drop in a major streaming company’s stock is a typical reaction after earnings reports, falling below an important support level. We expect other high-valuation growth stocks to follow this trend as they release their earnings soon. This means that buying puts or setting up bearish put spreads on stocks that have surged could provide a good protection against potential disappointments.
Given the disparity between strong indices and weakness in certain key stocks, we advise caution when betting heavily on single stocks. A safer approach is to use defined-risk positions on indices like the SPX or QQQ. For example, employing call spreads lets us take advantage of potential gains while limiting our risk. Recent market data shows that this rally has been mostly fueled by a select group of large-cap stocks, making broad index exposure more appealing than picking individual stocks.
Market Movement Strategies
In U.S. presidential election years, the summer months can lead to market volatility and shifts in sector focus as uncertainty grows. We’re preparing for this by focusing on strategies that benefit from time decay and limited price movement, such as iron condors on major indices. This allows us to profit if strong trends slow down and the market holds onto its recent gains.
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by VT Markets
Jul 18, 2025
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