Alert

Looking for even more trade ideas? Sign up for Alpha Boost, a FREE email from quiet foundation!

Subway Stairs

Will Stock Volatility Come Back?

Sep 7, 2021

By: Frank Kaberna

There comes a time when stocks grind higher at such an innocuous pace that one starts to wonder if this whole trading thing might be over. Has the mixture of the Federal Reserve and monetary controls taken risk out of the market? Will S&P 500 Volatility Index readings of 30, 40, and 50 become a thing of the past? Are put options on stocks headed to free?

The answer to these questions is likely no, but that isn’t to say the fear of the death of fear in the stock market is unwarranted. The S&P 500 closed at its 55th all-time high of the year last Thursday*, and it’s only September.

New Highs Are Nothing New

That said, a slew of peaks stacked on top of each other is not a novel concept in 2021; in fact, a myriad of new highs each year has become somewhat expected recently.

S&P 500 Index All-Time Highs

2021

2020

2019

2018

2017

55

33

37

19

54

Source: Yahoo! Finance (https://finance.yahoo.com/)


How Many Highs Does It Take to...

While selling all-time highs has been a rough strategy for the last half decade, the cycle of stock movement that’s held for over a century (simply put: up, sideways, down, repeat) would predict that a plateau and fall is coming.** Take, for example, one of the last multiyear runs of many all-times highs: 1995-99.

S&P 500 Index All-Time Highs

1999

1998

1997

1996

1995

29

42

41

35

67

Source: Yahoo! Finance (https://finance.yahoo.com/)

This five-year span actually saw more highs in the S&P 500 Index than the current stretch stocks are on. Are equities on the precipice of a crash? Hard to tell. But many think one is due, and there’s little harm in planning for it if done in moderation.


Staying Small Selling Stocks

Futures can offer a low-cost outlet for either hedging your long stock portfolio or speculating on a crash, yet these low costs can reflect large size. Sprinkling in one or two Small Stocks futures might be more appropriate than a Micro E-mini or E-mini future after a dozen new highs.

Size of Equity Index Futures

Small Stocks

E-mini S&P 500

Micro E-mini S&P 500

$7,800

$226,500

$22,650

Notional Sizes taken from Small Exchange and CME Group 9/3/21

There’s something enticing about selling a market that looks too expensive, and futures can let you go down that road with relative ease. Just make sure you’re able to see the end of it.


Follow us on Twitter: https://twitter.com/small_exchange

Subscribe to our YouTube Channel: https://www.youtube.com/channel/UC5pAsul3H_7FYuPmZscClrA


*S&P 500 Index data as of 9/2/21

**See stock market crashes of 1907, 1929, 1987, 2000, 2008 in Dow Jones Industrial Average via Yahoo! Finance

© 2021 Small Exchange, Inc. All rights reserved. Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information in this advertisement is current as of the date noted, is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. The risk of loss in the trading of stocks, options, futures, and ETFs can be substantial. Trading in stocks, options, futures, and ETFs is not suitable for all investors. Trading futures involves the risk of loss, including the possibility of loss greater than your initial investment.


Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.

tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”). tastytrade is a trademark/servicemark owned by tastytrade.

Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.

© copyright 2013 – 2021 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on tastytrade.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.