How to play market volatility in 2023, according to Evercore ISI

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Evercore ISI says there could be big swings in the market early next year, so investors may want to use an options strategy to help cushion the impact.

"There's never been a bear market that has bottomed without a noticeable volatility spike, and that didn't occur at all in 2022. That's why we think the first half is likely to be volatile," said Julian Emanuel, senior managing director at Evercore ISI. "There's never been a bear market that's bottomed before the recession started, which is why we think the October bottom is a bottom, not the bottom," Emanuel said.

" Emanuel's strategy involves buying March 31 S & P 500 puts and calls that are out of the money. He said that since the October low, the index has been in a range that's bound between 3,500 and 4,100. "We're telling people to buy 4,100 calls and 3,500 puts on the idea that in all likelihood, you are going to break out of that range in that time," he said.

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