Add training workflow, datasets, and runbook
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1000
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Volatility trading, basics of (continued)
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"fudge factor," 731, 733
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implied volatility, 727, 732-743
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as predictor of actual volatility, 737-7 43
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LEAPS, 735, 736
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percentile, 734-735
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range, 735-737
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time left in option, 736-737
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Volatility Index ($VIX), 738
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moving averages, 732
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summary, 748
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trading, 7 43-7 44
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why volatility reaches extremes, 7 44-7 48
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bear market in underlying stock, 746-747
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cheap options, 747-748
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illiquid options, 745-746
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insider trading, 7 45
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sellers of volatility, danger for, 7 48
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supply and demand of public, 747
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Volatility trading techniques, 812-845
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as art and science, 812
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summary, 844-845
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trading volatility prediction, 814-837
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backspreads, 827, 834-836 (see also Volatility
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trading techniques, volatility backspread)
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calendar spread, selling, 833
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composite implied volatility reading, 815
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histogram, construction of, 831-832
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historical volatility, comparing current and past,
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821-824
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implied and historical volatility, comparing, 817-
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818
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percentile of implied volatility approach, 814-817
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probability calculator, 824, 827-829
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reverse calendar spread, 833-834
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selecting strategy to use, 824-826
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selling volatility, 826-827, 833-836
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stock price history, using, 829-832
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summary, 836-837
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volatility chart, reading, 818-821
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when volatility is out of line, determining,
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814
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volatility backspread, 827, 834-836, 841
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margin, 836
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not for LEAPS options, 835
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volatility skew, trading, 837-844
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collar, 840
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Index
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differing implied volatilities on same underlying
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security, 837-838
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forward/positive volatility skew, 843
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reverse/negative volatility skew, 839-840
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summary, 844
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wrong predictions, two ways for, 813
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volatility skew, 813
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Warrants:
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covered writing against, 90-91
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rho, 872-873
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Wash sale rule, 922-923
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Whipsaw, 403
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Wrap symbols, 25-26
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Writer, definition, 6
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XMI (Major Market Index), 499
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