So how does a trader who doesn’t have Mr. Buffett’s portfolio to back up his trading, navigate the current volatile environment and take advantage of the multiple opportunities it provides? The answer is by utilizing a product where you can clearly define your risk if you are wrong and easily play both sides of a volatile market.
Option traders were clearly not set-up for a more than 30% surge in shares of Kraft (Ticker: KRFT) following a deal to merge the company with Heinz (Ticker: HNZ) to create The Kraft Heinz Co. On Tuesday, shares in Kraft closed at $61.33.
News that 148 passengers and crew were feared died following the crash of a Germanwings flight in a remote area of Southern France sent shares in Lufthansa (Ticker: LHA) down by about 3%. Germanwings is the low-cost subsidiary of Lufthansa, and shares in other budget carriers fell in sympathy.
With stories and analysis pointing to fewer and fewer physical places to store crude oil coupled at the hip with an ever-strengthening dollar, it’s hard to get optimistic on the outlook for energy prices.
Shares in Lumber Liquidators continue to rebound and last traded higher by 11.2% at $36.40 following the company’s investor call on Thursday. Implied volatility on its options has fallen by 12.1% to 87.7% having reached 127% as a result of the recent scandal.