Hands down, the absolute worst kind of volatility is zero volatility.
Not only does a “No Volatility / No Direction” – aka NVND – situation drive investors crazy as they wait for things to pick up… zero volatility will also cost traders money as time passes with no movement.
Take Fifth-Third Bancorp (Nasdaq:FITB), for example. In 2019, the banks were settling into what is normally a weak seasonal period. So, I recommended the purchase of a put on FITB and prepared for what my research told me was the inevitable – the stock was going to see a volatility storm and lower prices.
A month later, I’m watching the computer screen in aggravation after the stock had gone sideways on me.
