I am interested in making money on the volatility of the Microchip stock price (MCHP on Nasdaq stock index). The share quote price rises and falls about a 10% a month during the uncertain times of lockdowns and elections, and about an average 5% a month in less stressful times. You know the company: you work with its products everyday: it's solid.
To make money, buy 100 to 1000 shares (@ $10000 - $110,000 USD) near the low side of the value oscillation and sell near the high side of the price swing. Well, yeah, buy low, sell high, and easier said than done. But while MCHP is trending upwards as a long-term investment, it is also bouncing around on a weekly basis. Block buying of, say, 50 shares at $105 a share, another 50 at 103, 50 more at 102, and 50 at 100 (roughly $22000 investment) when the price is heading downwards and hits these points would seem reasonable because a week or two later you can sell 50 at 105, 50 at 106, 50 at 108 and sell the remaining 50 shares when the price has fallen 15% off its weekly peak (indicating the start of a downward trend).
This is "harvesting" about $2000 in short-term capital gains every two or three weeks from a $22,000 cash stake. Expect the tax man to take %30 to %40 (actually a WAG on my part, but still reasonable). In order to do this, you need a stock broker that charges minimal or no commissions, such as AmeriTrade which charges a fee $30-$50 on any stock transaction of any size or Charles Schwab, which charges no commissions on transactions for accounts with $100K - $200K worth of stocks and cash.
Look at a chart of MCHP stock price for the past six months. There's a lot of "bounce".
Is anyone doing this? Any tips on what to watch for? and what to avoid?