Larry’s Note: Last Wednesday, I shared why “zero-day” trades are worth paying attention to… And since that night, I’ve already handed my Opportunistic Trader subscribers their first win.
Options trades go into overdrive right before their expiration. And when the setup is right, you can see quickfire gains. That makes this an incredibly exciting style of trading. Even better, you can get started with as little as a few hundred dollars into each trade.
The good news is that there’s still a little time left to watch the replay of last Wednesday’s event… and hear about the special offer that’s available right now. But that window is rapidly closing…
So if you haven’t learned about zero-day trading yet, catch the replay right here before it goes offline.
A volatile mix of ingredients is coming together all at once.
Geopolitical tensions, rapid technological developments, emerging trade wars, interest rate pivots… It’s enough to have anyone feeling a little uncertain.
As a result, we’ve seen sharp swings in the S&P 500 as headlines on artificial intelligence and tariffs rattle investors.
And in fact, the Global Economic Policy Uncertainty Index just hit its highest level ever. The last time it was anywhere near this high was during the 2020 COVID pandemic.
So today, let’s look at where we’re seeing warning signs… and what it means for your portfolio…
Rising Volatility
The currency market is the largest in the world.
Roughly $7.5 trillion in currency trades happen every single day. In just 17 days, currency trades equal the value of the global stock market’s trades across an entire year.
And just like the stock market, currencies can cycle through periods of volatile price action.
With global uncertainty hitting record levels, price swings in currency markets are on the rise.
Take a look at the chart below. It measures currency volatility going back to the start of 2021.
Currency volatility picked up at the end of 2021 as inflation jumped and central banks rushed to raise interest rates.
The measure peaked at the end of 2022. That period coincided with the S&P 500’s most recent bear market.
Currency volatility then fell steadily into early 2024, where it bottomed.
But volatility has begun trending higher ever since (shown with the arrow).
That means more instability among the world’s major currencies. And if history is any guide, that’s a concerning development…
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Watch for the Spillover
Jolts in the currency markets can have a cascading effect on the economy and stock market.
Remember that currency markets are the largest in the world. So when things go haywire, volatility in currencies can impact your portfolio in unpredictable ways.
Look no further than the Japanese yen mess from last year as an example. (We covered the action in detail here.)
In essence, there was a popular trade where investors would borrow cheap funds in yen (which had a low interest rate) to buy higher-yielding assets.
But last year, the yen soared in value… and that trade blew up.
The Japanese stock market dropped 12% in a single day. U.S. markets also plunged, with the S&P 500 falling 8% in just three days.
And that’s just one example. Many other infamous economic events centered around the currency market as well.
You’ve probably heard about George Soros scoring a billion-dollar profit when the United Kingdom was forced to devalue the British pound.
Or think back to when President Nixon ended the Bretton Woods system of fixed currency exchange rates in the early 1970s. A period of economic turmoil followed, featuring an oil crisis and stagflation.
That’s why it’s worth being cautious now. The recent increase in currency volatility means it’s time to be on watch for spillover effects on the economy and stock market.
And in these uncertain moments, trading remains my favorite way to maneuver.
By getting in and out of trades quickly, we limit our exposure to any big market shakeups. And as long as we use careful risk management, we won’t be in danger of blowing up our accounts even if things do get precarious.
That’s why I’m excited to bring 0DTE options trades to readers. As I mentioned up top, there’s only a little more time to catch my latest presentation, where I explain why these “zero-days-to-expiration” trades are gaining so much attention.
This opportunity is a great addition to your portfolio… especially if volatility continues to build.
Simply go right here to watch the replay.
Happy Trading,
Larry Benedict
Editor, Trading With Larry Benedict