How i will trade the 2016 US presidential election


US presidential election is on Tuesday,  November 8. 2016.

This is known event at precise point in time with unknown result. We’ve had that type of  tradable political events before – remember debt ceiling “drama” in August of 2011?

I think the election offers great trading opportunity as (implied) volatility tends to rise before the event. Only to be fading in a matter of days. We do not know who will be elected as next POTUS. Yes, seriously – nobody knows… oh wait, you still trust those polls after Brexit?
We also cannot predict how the stock market index will react. Some say it will crash if Trump wins… or it will rally if Clinton wins. I won’t be catching any of those trains.

I’ll bet my money (yes, real money) that VIX futures will come down because one of the greatest enemy of stock market – uncertainty about the future – will be reduced after event has happened. Even if the market drops the volatility will still be coming down from lofty levels.

You could trade it as short UVXY or long SVXY trade. Both ETFs have tradable options available. Hence finds the best possible option combination for you just before the election.

I’m planning  to open the position one day before the event, on November 7. 2016 and hold it until options expire. Follow up to this post is coming!

And as always – it’s your money, always do your own homework.