Trading Options in Extremely Low Volatility

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

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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!
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