Trading Options in Extremely Low Volatility

Share it with your friends Like

Thanks! Share it with your friends!

Close

Find out if extending your duration is a viable strategy to make up for a lack of volatility when Implied Volatility Rank is low!

See more trading videos: http://bit.ly/10rdl8V

When Implied Volatility (IV) is low, our probability of profit is typically lower than periods of high IV. However due to the relationship of volatility and time, is there anyway that we can change our desired timeframe for entering a trade to compensate for the low volatility? Today, Tom Sosnoff and Tony Battista cover this exact topic. Since low IV is coming back into the market, the guys first explain the time/volatility relationship. They find out that you need to multiply the volatility by the square root of two in order to calculate the desired days to expiration, when looking for the same expected move. After they find this out, Tom and Tony look at a study that compares selling a longer term Strangle versus 3 shorter term Strangles when IV is low. They find out that it is viable to extend your duration in order to make up for the lack of volatility!
======== tastytrade.com ========

Finally a financial network for traders, built by traders. Hosted by Tom Sosnoff and Tony Battista tastytrade is a real financial network with 8 hours of live programming five days a week during market hours. Tune in and learn how to trade options successfully and make the most of your investments! http://goo.gl/EaF69C

Subscribe to our YouTube channel: http://goo.gl/Szl24S

Watch tastytrade LIVE daily Monday-Friday 7am-3pmCT: http://goo.gl/EaF69C

Download our mobile app, Bob the Trader: http://goo.gl/zgIyco

Follow tastytrade on Twitter: https://twitter.com/tastytrade

Become a fan of tastytrade on Facebook: https://www.facebook.com/tastytrade

Follow tastytrade on LinkedIn: http://www.linkedin.com/company/tastytrade

Follow tastytrade on Instagram: http://instagram.com/tastytrade

Follow tastytrade on Pinterest: http://www.pinterest.com/tastytrade/

Comments

Comments are disabled for this post.