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+782 Part VI: Measuring and Trading Volatility 
+volatility will be slightly harmful to the spread. However, since risk is limited in a 
+backspread, such a decrease in implied volatility would not have catastrophic conse­
+quences unless one had overcommitted his funds to one position. 
+SUMMARY 
+In general, one can always determine the exposure of his position to volatility by com­
+puting the vega of this position. However, it is also useful for a strategist to have some 
+general feeling for how implied volatility will affect his positions and strategies. Thus, 
+this chapter was designed to point out the most common effects that changes .in 
+implied volatility will have on the basic types of option strategies. Once one has a 
+feeling for his exposure to volatility, he can then assess whether an adverse volatility 
+movement is likely. For example, if an increase in implied volatility would be harm­
+ful, and the strategist sees that current levels of implied volatility are quite low in 
+comparison to historical norms, then perhaps he should remove or adjust the posi­
+tion. 
+Volatility and the price of the underlying are the two major components 
+affecting profitability for most option positions. Time decay is only most pertinent 
+as expiration approaches. Yet, many traders concentrate greatly on potential price 
+movements of the underlying, often while ignoring what changes in implied volatil­
+ity could do. That is a mistake, for the most knowledgeable option traders plan for 
+volatility risk at all times. Understanding and handling that risk can have a positive 
+effect on an option trader's profits.