Volatility returned last week in a big way as investors fretted over weaker-than-expected earnings reports and assessments of the U.S. economy. And, as usual, the anxiety levels reached amounted to a big overreaction.

The S&P 500 only fell by as much as 1.5% at the worst over those five days, but the S&P 500 Volatility Index (VIX), which can be viewed as a measure of the insurance that institutional investors take out to protect themselves from loss, rose as much as 20%. In short, they took about 13 times more insurance than they really needed, which is a lot even for this typically squeamish bunch.

There are a lot of moving parts right now, between the rising U.S. dollar, softer U.S. economic data, super-volatile energy prices, softer U.S. corporate earnings and quantitative easing in the eurozone, China and Japan. It is up to the stock and bond markets to sort it all out in real time…and the CounterPoint Options system’s job to determine where investors are making their mistakes — and attack those vulnerabilities.

The near-stagnation in first-quarter GDP in the United States was a lot weaker than most investors were anticipating, but economists are largely sticking to their guns — refusing to change their upbeat view that the underlying economic recovery and labor-market conditions are actually improving, despite the recent evidence to the contrary.

A key element, as always, for reasons that perplex and confound, is that consumption growth is expected to rebound in a big way once weather patterns normalize. On the industrial side of things, mining investment — which includes oil and gas exploration — was a huge drag in the first quarter, and this is expected to continue in the second quarter.

But the consumer is expected to save the day, as usual, with consensus expectations for a 3.5% annualized GDP growth rate for the second quarter.

Buttressing that sanguine view of the consumer is an expected acceleration in wage growth. The key data point to wrap all this up will come on May 8, when the U.S. jobs report for April is published. Optimists appear to be in charge of the consensus, because they expect non-farm payroll employment to have increased by a smashing 230,000.

And, finally, the optimists are expecting that the conclusion of the West Coast port dispute in February will lead to a big rebound in imports in March — which, in turn, would result in a sharp deterioration in the monthly trade deficit. Taking it one step further, that would help boost expectations for a much better upward trajectory for the economy in the second quarter.

Now, even if you know exactly how all this is going to turn out, it is still difficult to determine how to trade equity and bond options successfully due to the fact that current prices reflect and discount both recent conditions and future expectations.

That’s where the CounterPoint Options system comes in.

The system has recommended a raft of interesting ways to help traders take advantage of these conflicting paths and the attendant volatility. Here is one of its current trades, a bullish play on the iShares Russell 2000 Index (ETF) (IWM).

Buy the IWM June 19th $121 calls at $3.95 limit, good till canceled, for target $5.20. The ticker symbol is IWM150619C00121000, and these are the monthly calls that expire on June 19, 2015.

InvestorPlace advisor Jon Markman operates the investment firm Markman Capital Insights. He also offers a daily trading advisory service, Trader’s Advantage, and CounterPoint Options, a service that helps individual traders make steady, consistent profits with volatility-related instruments.