The 5 Most Volatile Stocks This Week And How To Trade Them

After focusing on earnings for the bulk of last week, we're going to shift gears a bit today. This week, the spotlight is on implied volatility (IV) and, more importantly, five stocks poised to explode in the next week.

We've discussed IV quite often and how, in many cases, it's easier to track than the price itself. And right now, it's where some of the best trading setups of the summer are hiding.

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So today, I'm going to give you the five names flashing the biggest volatility spikes, and what I'd consider doing with each.

Molina Healthcare

Molina Healthcare (NYSE:MOH) has been getting crushed. It traded around $360 in mid-March, and now it's scraping along near $180. That's a 50% haircut. Most of the drop occurred after a gap down earlier this month, when volatility started to intensify. IV jumped from 37 to 65. That's a huge move for a healthcare name.

If I were to trade this, I'd be looking to sell premium, either through a credit spread or a naked option, depending on how aggressive I wanted to be. Either way, I'm not buying options here. They're way too expensive.

QuantumScape

QuantumScape (NYSE:QS) was a $4 stock not long ago, but now it's bouncing between $12 and $15. That alone tells you volatility is running hot. In fact, it doubled in a month: IV went from 60 to 140. It's come off a bit since then, but this one's still cooking.

If I were bullish, I'd look to sell puts or put spreads. If I were leaning bearish, call spreads would be the safer play. Either way, you want to take advantage of that pumped-up premium.

Joby Aviation

Joby Aviation (NYSE:JOBY) has been on a tear! It traded at $5 back in April and is now hovering around $18.22. The IV has ramped right alongside price, from 60 to 112.

Earnings are coming up on August 6, so we've got a little more time for that IV to climb. If this lines up with one of my bullish patterns, I'd probably go after a put credit spread, but I'm also open to fading it with a call spread if it starts to roll over. Again, selling premium is the play.

Centene

Centence (NYSE:CNC) has been an absolute disaster. It was in the mid-$60s a few months ago and is now trading around $27.77. It's been getting chopped in half for weeks. IV followed that drop, climbing from 30 to a peak of 86. That's nearly triple the baseline.

If I saw a bearish setup, I'd be interested in selling call spreads. For a bullish bet, selling puts would make sense, but only if the charts agree.

UnitedHealth Group

UnitedHealth (NYSE:UNH) is the one that really has my attention. The stock dropped from $600 in mid-April to $250 in mid-May. It has since clawed back to around $284, but it's still way off the highs.

IV spiked from 30 to 74 during that drop, and while it's come down, we're back in the high 40s now. This stock is in the spotlight for all the wrong reasons at the moment. And that works in the seller's favor by keeping premiums expensive, exactly what we want when selling options.

If I'm bullish, I'd be looking at selling put spreads after earnings. If the setup turns bearish, I'd flip the script and look at call spreads. Either way, the premium gives us room to work with.

The bottom line is that each of these names is showing a clear pattern: surging IV heading and inflated premiums that are pricing in major moves.

So, buying options into this kind of volatility? Not your best move under these circumstances. The edge here isn't in buying options—it's in selling premium while IV is elevated.

If you've got a bullish or bearish setup that fits one of these charts, this is your window. Just remember that high volatility won't stick around forever.

Time your entry. Know your risk. And don't overstay the trade.

Editorial content from our expert contributors is intended to be information for the general public and not individualized investment advice. Editors/contributors are presenting their individual opinions and strategies, which are neither expressly nor impliedly approved or endorsed by Benzinga.

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