The winter holidays are a great time to celebrate with friends and family and reflect on the past year.

However, if you're an active investor, you may not want to shut things down too early. According to new research by the tastytrade financial network, the last week of the year may actually hold some valuable nuggets of opportunity.  

While most traders would likely describe the trading days between Christmas and New Year’s as "quiet" or "sleepy," signs point to this sentiment being more mythological than reality.

A recent episode of Options Jive presents evidence that a few popular myths relating to holiday trading simply aren't true.

For example, it's doubtful many traders would believe trading volumes in the S&P 500 ETF (SPY) are actually higher during "holiday" periods (days between Christmas and New Year’s) than on "normal days." The graphic below illustrates this fact quite clearly:

The episode also points out that liquidity in the S&P 500 is stronger than expected during the days before New Years, as compared to the week prior - which is again probably contrary to popular opinion.

Finally, research is presented that suggests the VIX (on average) tends to rise during the final week of the trading year. In 2016 this trend has continued, with the VIX bouncing from roughly 11.5 to almost 14 during the four trading days after Christmas.

The good news for traders is that the above data suggests that opportunity can be found in the markets no matter the time of year - especially for those with the motivation and patience to find it.

In trading, like most endeavors, there often exists only a small margin separating success from failure. And it’s possible that a little extra vigilance during the holidays may push you closer to achieving your goals.

Whether you are laying on the beach this week, or grinding as usual, we wish you all the best for the coming year.

Happy Holidays from all of us at tastytrade!


Sage Anderson has an extensive background trading equity derivatives and managing volatility-based portfolios. He has traded hundreds of thousands of contracts across the spectrum of industries in the single-stock universe.