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+844 Part VI: Measuring and Trading VolatiRty 
+tage of the volatility skew. The put backspread is best established when the overall 
+level of implied volatility is in a low percentile. Finally, the call ratio spread has a 
+great deal of risk to the upside ( and futures prices can fly to the upside quickly, espe­
+cially if bad fundamental conditions develop, such as weather in the grain markets). 
+The call ratio spread would best be used when implied volatilities are already in a 
+high percentile. 
+As a general comment, it should be noted that if the volatility skew disappears 
+while the trader has the position in place, a profit will generally result. It would nor­
+mally behoove the strategist to take the profit at that time. Otherwise, follow-up 
+action should adhere to the general kinds of action recommended for the strategies 
+in question: protective action to prevent large losses in the case of the ratio spreads, 
+or the taking of partial profits and possibly rolling the long options to a more at-the­
+money strike in the case of the backspread strategies. 
+SUMMARY OF VOLATILITY SKEWING 
+Whenever volatility skewing exists - no matter what market - opportunities arise for 
+the neutral strategist to establish a position that has advantages. These advantages 
+arise out of the fact that normal market movements are different from what the 
+options are implying. Moreover, the options are wrong when there is skewing at all 
+strikes, from the lowest to the highest. The strategist should be careful to project his 
+profits prior to expiration using the same skewing, for it may persist for some time to 
+come. However, at expiration, it must of course disappear. Therefore, the strategist 
+who is planning to hold the position to expiration will find that volatility skewing has 
+presented him with an opportunity for a positive expected return. 
+SUMMARY OF VOLATILITY TRADING 
+The theoretical trading of options, mostly in a neutral manner, has evolved into one 
+large branch - volatility trading. This part of the book has attempted to lay out the 
+foundations, structures, and practices prevalent in this branch of trading. As the read­
+er can see, there are some sophisticated techniques being applied - not so much in 
+terms of strategy, but in terms of the ways that one looks at volatility and in the ways 
+that stocks can move. 
+Statistical methods are used liberally in trying to determine the ways that either 
+volatility can move or stocks can move. The probability calculators, stock price dis­
+tributions, and related topics are all statistical in nature. The volatility trader is intent 
+on finding situations in which current market implied volatility is incorrect, either in 
+its absolute value or in the skew that is prevalent in the options on a particular under-