Charles’ Note: It’s been a gut-wrenching couple of weeks… 

Predicting the direction of the stock market is hard enough under normal circumstances. It’s practically impossible when a tweet from the president can send it 5% higher or lower in a day. 

As an investor, there are a couple moves you can make to protect yourself… and even profit under these circumstances. 

As I have been pounding the table on, you want to have a little more cash on hand than usual. This doesn’t mean you should sell everything and hide in a bunker in Idaho. But you don’t need to be 100% invested in stocks right now. And cash is “ballast” in your portfolio in a time like this.

You should also follow trends that are working. Today, that means buying gold. 

Since “Liberation Day,” the S&P 500 is down by about 3.5%. Meantime, gold is up about 19%. Why fight that trend when you can profitably join it? 

Finally, you can turn volatility into profits with an active trading strategy. 

That’s where veteran trader and friend of Freeport Jonathan Rose comes in. He began his career nearly 30 years ago as a floor trader on the Chicago Mercantile Exchange. And he’s my go-to guy for out-of-the-box trade recommendations for subscribers of our Freeport Alpha trading service.

I’m not too proud to admit that two out of the three most successful trades at Freeport Alpha weren’t my recommendations. They were Jonathan’s. Subscribers who acted on them made quick profits of 100% and 127% in the chaotic aftermath of the U.S. presidential election last November. 

So, what is Jonathan recommending now? It’s a type of trade that actually benefits when volatility is high like it is today. And as you’ll see, it’s been giving Jonathan’s followers the chance to make outsized gains.

How to Profit While Everyone Else Is Panicking

The stock market is in turmoil. 

Volatility is sky-high.

And all anyone can talk about is tariffs.

If you know what’s coming next in the trade war, congratulations – I have no idea.

What I do know is that we’ve just seen about a year’s worth of gains wiped from the stock market… and trillions of dollars of value go up in smoke.

I hate to see folks take a hit to their 401(k)s and their investment portfolios. That’s money they’re counting on for their retirement.

My long-term stock holdings have been going down along with everyone else’s.

But I’ve made most of my wealth as a trader. 

As a trader, I couldn’t be more excited about the kind of market we’re in right now.

I’ve been a professional trader for nearly 30 years. And it’s in times like these that I have the chance to make my biggest profits.

I know that sounds weird.

But today, I’ll show you why.

I’ll also show you how you can turn the dramatic swings in stock prices we’ve seen over the last couple of weeks to your advantage.

As we’ll see, I’ve used it to give one group subscribers the chance to notch an average return of 35.4% – including winners and losers – over 30 trade recommendations.

And that’s not an annual gain. The average holding time for those trades was just 36 days.

First, it’s important to understand how exposed you are to this kind of volatility if you’re a pure buy-and-hold investor.

The Surfer and the Sandcastle Builder

If you have stocks in your 401k or brokerage account, you’re “short” volatility.

When uncertainty spikes, your wealth takes a hit.

But as a trader, you have the option of being “long volatility.”

You profit when uncertainty rises.

Think of it like two people on a beach. One is a surfer. The other is building a sandcastle.

The sandcastle builder wants calm, sunny weather. Flat tides. Predictability. 

He can work for hours, building something intricate. But if the waves suddenly surge, his work gets washed away.

The surfer, on the other hand, is hoping the waves will rise. 

He’s scanning the horizon for a swell. When volatility hits – big, unpredictable waves – he grabs his board and paddles out.

No waves, no action. He thrives on turbulence.

Traders are like surfers. They can profit from big moves, sharp reversals, dislocations. They seek out volatility and position themselves to profit.

Investors are like sandcastle builders. They want time and stability. Volatility is a threat, not a friend.

Right now, you want to be a surfer, not a sandcastle builder.

More Stormy Weather Ahead

Trump thrives on chaos. It’s part of his style. 

He’s also a big social media user. What he posts on social media has a real-time effect on markets, as investors and traders react to his every move.

We saw this last week when he announced he was pausing some of his tariffs. The stock market had one of its best days ever. The S&P 500 rose by 9.5%, marking its biggest single-day gain since 2008. The Nasdaq jumped 12.2%, its second-largest one-day gain ever. And the Dow had its best day since 2020 with a rise of 7.8%.

The thing is, there are unanswered questions about what he’ll do next. 

Some say he wants to use tariffs to bring in tax revenues – meaning the tariffs have to stay in place over many years to be effective.

Others say they’re a negotiating tool and will go away as soon as other countries agree to drop tariffs against the U.S.

It’s not my job to figure out who’s right and who’s wrong in the tariff debate. All I know is that this lack of clarity means more volatility ahead.

So, what am I doing to profit while most buy-and-hold investors are panicking?

I’m using a trading strategy I wish I’d learned a lot earlier in my career… one that allows me to profit when there’s a lot of movement in the stock market, like there is today.

Lightbulb Moment

I started my career as a floor trader at the Chicago Mercantile Exchange (CME) in Chicago in 1997.

Picture the chaos from the movie Trading Places… that was my daily reality. Packed into the CME trading pit, shouting over the noise, waving hand signals to buy and sell in real time.

I traded futures on the Nasdaq and S&P 500 there during the dot-com boom and bust. (Futures are contracts that allow you to bet on where the market is headed.)

After that, I became a partner at a “proprietary” trading firm meaning we traded our own money. It was my job to manage the firm’s risk.

And I’ve been a market maker on the Chicago Board Options Exchange. (A market maker buys and sells stocks to keep markets efficient and profits off the gap between the buy and sell price.)

Over my nearly 30-year career, I’ve tried dozens of different strategies. But it wasn’t until summer 2011 – and a conversation with my neighbor Pete at a BBQ in my backyard – that I learned about this “profit from movement” approach.

Pete is a veteran floor trader, like me. But he always seemed to be smiling during bouts of volatility while the rest of us were pulling our hair out. I was curious what his secret was.

“What are you doing that I’m not?” I asked him, beer in hand.

He laughed and said, “You’re guessing whether stocks will go up or down and trying to get lucky. Stop speculating on the direction of trades. Instead trade volatility itself. That’s where the real edge is.”

That was a lightbulb moment. 

Instead of profiting only if a stock went up (on a bullish trade) or down (on a bearish trade), I realized I could profit when a stock made a big move — up or down. 

And thanks to some more help from Pete, I learned that I could accomplish this with a unique type of trade. 

The Perfect “Long Volatility” Strategy

So, what was this magic solution?

It’s called a strangle. And it’s designed to profit from movement in the price of a stock… regardless of whether that movement is up or down.

Here’s how a long strangle works:

• You buy one out-of-the-money (OTM) call option.
• You buy one out-of-the-money (OTM) put option on the same stock.

Both options have the same expiration date and are based on the same underlying asset. 

For example, you could be buying a call and put for Apple (AAPL) that both expire on the same day.

The underlying stock is trading at $100.

So you buy a $105 out-of-the-money call.

And you buy a $95 out-of-the-money put.

You pay premiums for both options. Let’s say each option costs you $2, so your total cost is $4. That’s your max loss on the trade.

You profit if the stock makes a big move above $109 ($105 + $4) or below $91 ($95 − $4). You lose if the stock stays in its range and doesn’t move much.

Naturally, the larger the move (up or down), the higher your potential profit. So, volatility is your friend.  

The key point is that you’re not betting on direction – you’re betting that something big is going to happen, and option premiums will expand, or the stock will make a significant move in either direction. 

A side note: I recently gave Charles’ Freeport Alpha readers a strangle position to trade.

This strategy is unlike anything most folks have seen before. 

It doesn’t involve guessing whether a stock is going higher or lower. Instead, it pays off when a stock moves more than the market is expecting.

That makes it the perfect “long volatility” strategy.

These days, my focus is on helping subscribers learn to trade like pros at Masters in Trading. It’s the trading advisory and education business I set up in 2015.

In the past 12 months, I’ve used this strategy to give my subscribers the chance to close out the following triple-digit winners…

• 343% on Upstart Holdings (UPST) in 40 days 
• 375% on Snapchat (SNAP) in 37 days 
• 197% on Emergent BioSolutions (EBS) in 19 days 
• 130% on Doximity (DOCS) in 32 days 
• 156% on Harmonic (HLIT) in 47 days 
• 117% on Shopify (SHOP) in 37 days 

Of course, not every trade is a winner. 

Going back to last May, I’ve recommended my subscribers close out 31 of these “volatility” trades at one of my advisories. Twenty of them have been winners. The average hold time was 36.4 days. The average gain – across winners and losers – was 35.4%.

That’s not a perfect record. And I’m always striving to do better for my subscribers. But if you can make an average gain of 35% over the course of about a month, you’re doing a lot better than most investors.

That’s especially true when stocks sell off sharply or rebound at breathtaking speeds. With volatility on the up, I expect to make even higher returns on these trades. 

While buy-and-hold investors grit their teeth and try to ride out the storm, my subscribers and I are looking forward to surfing the waves.

In fact, some of them have already been enjoying some of their best trading gains in a while.

Here’s some of the feedback I’ve been getting from my apprentice traders in my subscriber-only chat community…

If you want to learn more about how these trades work, you can catch me at Masters in Trading: Live.

Each day the markets are open, at 11 a.m. ET, I get on camera, go over my favorite trade setups, and show you the strategies I use to profit from them.

If you’re interested in learning how to trade like a pro… and profit from volatility with trades like these… sign up for free here.

I’ll see you on the next livestream.

Jonathan Rose