Market volatility is low — here’s the best way to trade

Traders on the floor of the New York Stock Exchange.
Source: CNBC

The stock market has become very quiet even as the S&P 500 inches higher to one record after another with the major averages making just slight moves each day this week. If this lull in trading continues, it creates a more challenging environment for investors to generate income.

The Cboe Volatility Index, known as the VIX, has been trading under the 20 threshold for eight sessions straight. The VIX has fallen back to pre-pandemic levels months after the market recouped all the losses. The index looks at prices of options on the S&P 500 to track the level of fear on Wall Street.

"The tactical picture is not so clear," said Tony Dwyer, Canaccord Genuity chief market strategist. "There has been day-to-day internal rotation that has kept the indices grinding higher while active managers have been frustrated in what the majority of stocks are doing."

The fall in volatility coincided with the S&P 500 breaking above 4,000 for the first time ever. But the market has basically been stuck in a holding pattern. We asked a number of traders and strategists for their best trade ideas beyond major index funds if the churn continues.

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