The Dow Jones Industrial Average fell by around 200 points on Friday, dipping 0.2% following President Donald Trump’s nomination of Kevin Warsh to replace Jerome Powell as Fed Chair in May. The S&P 500 also declined by 0.2% and the Nasdaq Composite decreased by 0.3%. Despite this, all three major averages achieved gains in January: the Dow rose 2.1%, the S&P 500 increased by 1.8%, and the Nasdaq went up by 1.9%.
Verizon outperformed with a 6.6% rise due to its highest quarterly subscriber addition since 2019, adding 616,000 subscribers. American Express dropped 3.1%, even after a revenue increase, as concerns over higher credit loss provisions and expenses held back sentiment. ExxonMobil and Chevron both exceeded earnings expectations, despite drops related to a global oil supply glut.
Apple Stock Fluctuation
Apple posted a 1.2% decrease in stock value, even after reporting revenues that were 16% higher year-over-year, due to profit-taking and broader tech sector challenges. Silver saw a dramatic 21% drop from record highs, marking a sharp correction as profit-taking ensued. However, silver maintained a monthly gain of over 30%, driven by geopolitical uncertainty and tight physical market conditions.
The nomination of Kevin Warsh to lead the Fed introduces significant uncertainty, which is a clear signal to prepare for higher market volatility. We should anticipate the CBOE Volatility Index (VIX), which sat near 14 for much of January 2026, to climb towards the 20 level as markets digest a potentially more hawkish interest rate path. Derivative traders can position for this by considering long positions in VIX futures or buying options on volatility-linked ETFs.
Given the market’s strong start to the year, the current pullback is an opportunity to protect those gains. We remember how the aggressive rate-hiking cycle that began in 2022 pressured equities, and Warsh’s nomination brings that memory back into focus. Buying protective puts on major indices like the S&P 500 (SPY) or Nasdaq-100 (QQQ) could be a prudent move in the coming weeks.
We are seeing clear divergence between sectors that requires targeted strategies. For strong performers like Apple that are now pulling back despite blowout earnings, writing covered calls could generate income while providing a small cushion against further declines. In contrast, for financials like American Express showing weakness on rising credit loss provisions, purchasing puts could be a hedge against any further signs of consumer distress, especially as Q4 2025 data showed a slight uptick in credit card delinquencies.
Options Strategy in Action
On the other hand, Verizon’s powerful subscriber growth makes it a candidate for bullish option strategies. Buying call spreads on Verizon could offer a cost-effective way to bet on continued momentum from its new strategic direction. The stability of oil majors like Chevron, which are profitable even with crude near $35, suggests they may trade in a defined range, making them suitable for neutral, income-generating strategies like iron condors.
The historic 17% single-day plunge in silver is a stark reminder of the extreme volatility in precious metals. This environment is ideal for strategies that profit from large price swings, such as long straddles or strangles on the iShares Silver Trust (SLV). We expect this heightened volatility to persist as speculators who drove the price to record highs are now unwinding their positions.
Finally, the dollar has strengthened significantly on the prospect of a more aggressive Fed, a trend we expect to continue. Traders can use derivatives to bet on a stronger greenback, for example by buying call options on the Invesco DB US Dollar Index Bullish Fund (UUP). This also makes puts on currency pairs like the EUR/USD attractive, especially as it tests key support levels around 1.1900.
