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+Chapter 39: Volatility Trading Techniques 833 
+In reality, one would have to be mindful of not buying overly expensive options ( or 
+selling overly cheap ones), because implied volatility cannot be ignored. However, the 
+price of the straddle itself, which is what determines the x-axis on the histogram, does 
+reflect option prices, and therefore implied volatility, in a nontechnical sense. This author 
+suspects that a list of volatility trading candidates generated only by using past movements 
+would be a rather long list. Therefore, as a practical matter, it may not be useful. 
+MORE THOUGHTS ON SELLING VOLATILITY 
+Earlier, it was promised that another, more complex volatility selling strategy would 
+be discussed. An option strategist is often faced with a difficult choice when it comes 
+to selling (overpriced) options in a neutral manner - in other words, "selling volatili­
+ty." Many traders don't like to sell naked options, especially naked equity options, yet 
+many forms of spreads designed to limit risk seem to force the strategist into a direc­
+tional (bullish or bearish) strategy that he doesn't really want. This section addresses 
+the more daunting prospect of trying to sell volatility with protection in the equity 
+and futures option markets. 
+The quandary in trying to sell volatility is in trying to find a neutral strategy that 
+allows one to benefit from the sale of expensive options without paying too much for 
+a hedge - the offsetting purchase of equally expensive options. The simple strategy 
+that most traders first attempt is the credit spread. Theoretically, if implied volatility 
+were to fall during the time the credit spread position is in place, a profit might be 
+realized. However, after commissions on four different options in and possibly out 
+(assuming one sold both out-of-the-money put and call spreads), there probably 
+wouldn't be any real profit left if the position were closed out early. In sum, there is 
+nothing really wrong with the credit spread strategy, but it just doesn't seem like any­
+thing to get too excited about. What other strategy can be used that has limited risk 
+and would benefit from a decline in implied volatility? The highest-priced options are 
+the longer-term ones. If implied volatility is high, then if one can sell options such as 
+these and hedge them, that might be a good strategy. 
+The simplest strategy that has the desired traits is selling a calendar spread 
+that is, sell a longer-term option and hedge it by buying a short-term option at the 
+same strike. True, both are expensive (and the near-term option might even have a 
+slightly higher implied volatility than the longer-term one). But the longer-term one 
+trades with a far greater absolute price, so if both become cheaper, the longer-term 
+one can decline quite a bit farther in points than the near-term one. That is, the vega 
+of the longer-term option is greater than the vega of the shorter-term one. When one 
+sells a calendar spread, it is called a reverse calendar spread. The strategy was