By Maiya Keidan

(Reuters] – Markets are experiencing a wild ride because of the new COVID-19 virus.

The volatility is still a possibility for investors. They are looking to seize on opportunities while still protecting their portfolios.

Omicron was the Omicron variant. The stock dropped to its lowest point in one day for nine months Friday. But it rebounded Monday, as investors began to believe that this variant could be more mild than originally thought. Although the World Health Organization (WHO ) warned about a high likelihood of infected surges, U.S. President Joe Biden declared that America wouldn’t return to lockdowns.

These swings were a good opportunity for some investors.

Shawn Kravetz of Esplanade Capital told Reuters that he had been working to exploit sudden sharp concerns, such as Omicron, to boost positions where he believed the value was greater than any incremental risk. If markets dive again, he is willing to jump in.

London-based hedge fund Westbeck Capital Management took advantage of Friday’s sharp drop in oil to take a position in . Before making any bigger bets on an increase in oil prices, the fund will wait for further details about Omicron.

“We need to wait to see how this new variant develops. Jean-Louis Le Mee (the firm’s founder) said, “I feel that this is an enormous buying opportunity.”

However, not all are sanguine. Tim Pickering is the chief investment officer of Auspice Capital in Canada, which is a computer-driven, commodities-focused, fund. He reduced equity exposure last Friday.

“I think the biggest takeaway is the market is fragile and we should expect volatility,” he said.

Wall Street’s most closely followed fear gauge, Cboe Volatility Index was slightly lower on Monday. However, it remains elevated relative to its range of the past few months.

Steven Oh, head of credit at PineBridge Investments, said the Omicron variant has introduced more risks to the downside on the heels of the market’s sharp rally.

“If you have less confidence in the base case you may get a bit more defensive in positioning,” he said.

Although there are some hopes the virus won’t prove to be as severe, other experts warned that it should not be ignored.

Grant Wilson, Asia Pacific head at Exante Data said that Omicron has “definitely the potential to transform the game worldwide.” He also said that other factors like transmissibility and vaccine evasiveness must be considered.

Wilson stated that large asset managers need time to make important decisions. He expected lots of meetings with investment committees where the key question will be, “Is 2022 looking different?”

Key is how central banks react to the threat. Jerome Powell (US Federal Reserve Chair) warned on Monday that this new threat could muddy the outlook.

“The question now is does the Omicron variant mean that the Federal Reserve won’t hike rates next year?” Troy Gayeski (chief market strategist, FS Investments), still believes that rate hikes are on the horizon. According to Gayeski, he thinks there will shortly be a market peak sometime in January or April.

YEAR END NEARS

Despite these concerns, Wall Street giants like Citi and BlackRock (NYSE:) advised their clients to either stay invested or purchase on weakness.

BlackRock’s analysts on Monday said if vaccines prove effective “the strain only delays the restart of economic activity,” while Citi analysts said while “a market sell-off seems logical” it “would buy into any dip.”

Some have also noted that stock prices rose despite the Delta variant. The S&P 500 is up about 10% since early May, when the WHO designated the variant now known as Delta a “variant of concern.” Graphic: The U.S. stock market and the Delta variant, https://fingfx.thomsonreuters.com/gfx/mkt/akvezmdaypr/Pasted%20image%201638209351790.png

However, investors may be more inclined to seek out ways to preserve their gains than take on greater risk in a market year.

Hedge Fund Research data shows that the average hedge fund finished October at 11.4%, up from 11.8% in 2020. The S&P is up 24% year-to-date.

Marc LoPresti is co-managing Director of Alternative Investment Management Firm The Strategic Funds. He said that hedge funds have already taken on some more risky positions last week as Europe’s COVID-19 situation worsened. This was to preserve gains for the year.

LoPresti explained that “they did the majority” of derisking.