implied volatility

T

tradingcards

i want to buy low implied volatility (I.V.) and sell high I.V. How can i do that and what am i looking for?

What is considered high I.V. and what is considered low I.V.?


ISRG 230 NOV Puts has I.V. of 60%. is that considered high, low, in the middle?
 
Have you studied any books? Nathenberg for example. It takes quite a lot of theory to get started and understanding what you want to do.

Br
 
Not to disappoint you, the strategies you are looking for would be;

Straddle
Strangle
Backspread
Ratio vertical spread
Butterfly
Diagonals
Timespreads

there are probably more.. :)
 
IV is a relative thing, not absolute. What may be considered an extremely high IV for one stock, may be completely normal for another.
 
I like what IVolatility.com does with their IV Index, that is scale the implied from 1-100. 100 being the highest implied over the past 52 weeks.

However, the thing to remember about option pricing is that the biggest factor is the absolute price of the underlying instrument. Get the direction of price movement wrong, and it will be hard to make money with options, even if you get IV right. Especially true for a retail options trader.
 
Quote from panzerman:

I like what IVolatility.com does with their IV Index, that is scale the implied from 1-100. 100 being the highest implied over the past 52 weeks.

However, the thing to remember about option pricing is that the biggest factor is the absolute price of the underlying instrument. Get the direction of price movement wrong, and it will be hard to make money with options, even if you get IV right. Especially true for a retail options trader.
More...

Actually, it works both ways. So if you get the IV wrong then it could be hard to make money on direction. You also need to get the timing right otherwise time decay will kill ya.:D
 
Quote from panzerman:


However, the thing to remember about option pricing is that the biggest factor is the absolute price of the underlying instrument. Get the direction of price movement wrong, and it will be hard to make money with options, even if you get IV right.
More...

you can remove this problem by staying delta-neutral continously, although most retail options traders wouldn't really know how to do this.
 
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