13 lines
879 B
Plaintext
13 lines
879 B
Plaintext
Trading Implied Volatility
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Many of the strategies covered so far have been option-selling strategies.
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Some had a directional bias; some did not. Most of the strategies did have a
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primary focus on realized volatility—especially selling it. These short
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volatility strategies require time. The reward of low stock volatility is theta.
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In general, most of the strategies previously covered were theta trades in
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which negative gamma was an unpleasant inconvenience to be dealt with.
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Moving forward, much of the remainder of this book will involve more
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in-depth discussions of trading both realized and implied volatility (IV),
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with a focus on the harmonious, and sometimes disharmonious, relationship
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between the two types. Much attention will be given to how IV trades in the
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option market, describing situations in which volatility moves are likely to
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occur and how to trade them. |