For just under half of the UK’s voting population, the decision by the country to leave the EU made in its referendum at the end of June seemed to be all bad news. While for just over half of the population it was all good news. However, even if you voted in favour of the UK remaining in the EU there are a few ways that you can use Brexit for financial gain, given all the market uncertainty it has provided.
On options strategy that could be profitable from the effects of Brexit is to straddle stocks. Rather than picking individual stocks you think will increase or decrease in value, this involves buying a call and a put using the same strike price and expiration. Therefore, whichever way the market moves it can bring potential profits.
There are still risks involved, but they are much lower than simply purchasing stocks outright. For example, there needs to be a large enough market price change in either direction that covers the straddle price to make any money. It is a great strategy before a major event, such as the US presidential election, but useful in uncertain times like in post-Brexit life.
Invest in Rising Stocks
The massive impact Brexit has had on the stock market by bringing in a wave of uncertainty has led many investors to adapt their portfolio. Some immediately abandoned those which lost a lot of value, with stocks as a whole down 5% just two days after the result was announced.
Many financial institutions suffered in the sudden aftermath, such as Wells Fargo and JPMorgan Chase. However, as diversified banks full of expertise and a strong history they are bound to bounce back. Backing these stocks and others that have fallen but have a good track record, is a relatively easy way to profit.
Currency Spread Betting
There is a lot more risk involved with spread betting but it does allow traders to make huge profits from a small deposit. The pound took a real, well pounding, when the Brexit result was announced and sunk to its lowest level in 30 years.
Before the referendum any traders buying Japanese yen or other safe options will have made vast profits, as traders flocked to the currency as a traditional safe haven. Now the US dollar is strengthening and the pound returning to normal, which may be decent spread betting options.
Gold was another big winner from the Brexit, with many traders turning to it as a safe choice. This led it to increase in value significantly and experts predict with the continued uncertainty of the UK agreeing EU exit terms, the US presidential election and more, that it will continue to rise in price well into 2017. Whatever your political opinions, market movements and uncertainty do allow for a lot of financial gain.
Written by Ben Barlow