In today’s Growth Stock Wire, trader extraordinaire Jeff Clark takes a look at the use of Bollinger Bands in making trading decisions.
Bollinger Bands don’t tell you which direction the stock is headed, but as the bands pinch closer together, they’re warning a large move is on the way.
This is the best time to be a buyer of options. Call and put options are relatively cheap because the implied volatility is so low.
As volatility expands, the stock is using up the stored energy. When the Bollinger Bands spread abnormally far apart, they’re warning the stock is headed for a period of consolidation.