Trump’s trade disputes have sparked market volatility, which has become a boon for options traders.
As the stock market continues to rise in 2024, options traders who profit from volatility are thriving amid the chaos triggered by President Donald Trump’s trade disputes. For example, Kris McConnell, an intraday trader, used to rise at 3 a.m. during the overnight session to capture high volatility. However, with the market experiencing even greater turbulence this year, the 56-year-old day trader based in Las Vegas is now earning 80% more than last year—and he’s even able to hit the snooze button on his alarm clock.
"Every time the VIX jumps above 20, I think, 'Great! I can sleep in today!'" said McConnell, a trader at Bright Trading, a proprietary trading firm. "The more outrageous Trump gets, the better the volatility—and the better it is for all my trades."
In a volatile market environment, options strategies offer greater profit opportunities, especially for traders who capitalize on short-term price movements. However, such high volatility can pose challenges for long-term investors and may heighten concerns about overall market stability.
Meanwhile, larger long-only investors are suffering more. Following a decline of over 6% in the market value of the S&P 500 due to Trump’s tariff disputes with Canada, Mexico, and China, many people’s 401(k)s and retirement savings have taken a hit over the past two weeks. Yet professional volatility traders are benefiting from the policy moves of the Trump administration that are rattling the market.
"This is now the market for traders," said Daniel Kirsch, head of options at Piper Sandler.
According to Kirsch, those trading volatility now have more opportunities to monetize their positions through hedging and options, as stocks become increasingly correlated.
Large-scale macro risks like Trump’s tariffs can often force stocks to move in unison—and that is exactly what is happening. The stock correlation index, which had been hovering near historic lows at the start of 2025, surged to its highest level last week following a shakeout in yen carry trades in early August.
Rising Correlations and Soaring Volatility
The increase in stock correlations has come hand-in-hand with higher volatility. The Cboe Volatility Index (VIX), which measures S&P 500 fluctuations over the coming month, soared above 26 intraday last week—a level rarely seen since the COVID era of 2020-2022. Instead of retreating in the face of market stress, day traders seem to welcome the increased volatility. According to Cboe Global Markets Inc., zero-day (0DTE) options accounted for 56% of total S&P 500 trading volume in February—a record level.
A VIX above 26 indicates that market participants expect significant price swings in the coming weeks. Typically, a VIX between 15 and 20 is considered normal, so the current level suggests heightened anxiety among investors.
Notably, the popularity of options that expire on the same day (0DTE) has surged. These short-term options offer traders leverage on immediate market movements and are ideal tools for capturing quick profits in high-volatility conditions.
"Since the early days of COVID, we haven’t seen this level of activity," said John Bartleman, CEO of TradeStation Group Inc., an online brokerage catering to day traders. He noted that clients are moving away from broad ETFs to bet more on the volatile moves of individual stocks, with options trading volumes increasing for companies like Nvidia Corp., Tesla Inc., and MicroStrategy.
Although the VIX has risen, it hasn’t spiked to levels signaling full-blown panic, and market observers describe the recent sell-off as "orderly" compared to August. Thanks to robust hedging positions from January and February, investors have been partially shielded from deeper losses, and some positions are now being adjusted in anticipation of further volatility through spring.
The current market environment presents opportunities for short-term traders while compounding uncertainty for long-term investors. These contrasting conditions demonstrate that under the same market circumstances, the outcomes can vary greatly depending on one’s trading strategy and time horizon.
