Is trading Implied Vol, the real edge here? And anything directional has no edge?

traider said:
In trading, an edge is a statistical advantage that a trader has over the market. This advantage can be derived from a variety of factors, such as the trader's knowledge of the market, their ability to identify trends, or their access to information that is not available to the public.

A trader with an edge is more likely to make profitable trades than a trader without an edge. However, it is important to note that no trading system is perfect, and even traders with an edge will experience losses from time to time.

There are many different ways to create an edge in trading. Some common methods include:

  • Technical analysis: Technical analysis is the study of historical price charts to identify patterns and trends. Traders who use technical analysis believe that past price movements can be used to predict future price movements.
  • Fundamental analysis: Fundamental analysis is the study of economic data and company financial statements to assess the value of an asset. Traders who use fundamental analysis believe that the underlying value of an asset will eventually drive its price.
  • Sentiment analysis: Sentiment analysis is the study of how people feel about an asset. Traders who use sentiment analysis believe that the sentiment of the market can be used to predict future price movements.
  • Market timing: Market timing is the practice of buying and selling assets based on the overall market trend. Traders who use market timing believe that they can identify the best times to buy and sell assets by following the market trend.
The best way to create an edge in trading will vary depending on the individual trader's skills and resources. However, any trader who wants to be successful in the long run must have some kind of edge.
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If you're going to use ChatGPT to generate posts, how about indicating that at the top of the each post please?
 
Tall Mike said:
I've backtested a few technical patterns or indicators, and they all basically come back a mixed bag. On average.

From my own research, due to var risk premium, trading IV on options really seems like there is a true edge there.

I know I am not talking about transaction costs, and the disadvantages we have at the retail level, but Edge from IV seems like this is really the way to start teasing out an edge and what most "trading educators" don't even talk about. They are too caught up in technical patterns.
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Institutional systematic short volatility space now has an edge baked in due to their size. This used to not be the case, because of the nature of how they would manage their positions- tactically.

Your best bet may be to piggyback the sticky inventory that doesn't get shut down or rolled into expiry-
 
carson_volsignals said:
Institutional systematic short volatility space now has an edge baked in due to their size. This used to not be the case, because of the nature of how they would manage their positions- tactically.

Your best bet may be to piggyback the sticky inventory that doesn't get shut down or rolled into expiry-
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Could you roughly outline the process on how one might do this?

Thanks
 
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Generally short dated strategies (that don't roll - ie, the gamma is *sticky*, actually does compress range) tend to concentrate on strangles and puts within 7dte

recent examples:

Monday- short SPX strat sells 27-Nov 4490 4585 strangle ~1k times,

another fund sells 3500 of the 28-Nov 4380 Puts

short SPX strangle strategy executes two blocks every M / W / F

put seller executes DAILY

then at 2:30 CST, watch the 7dte volumes. Most of that is sold flow targeting near downside (~20d) and below
 
carson_volsignals said:
Follow us on Twitter/newsletter- you'll pick it up even without paying for any of our offerings

Generally short dated strategies (that don't roll - ie, the gamma is *sticky*, actually does compress range) tend to concentrate on strangles and puts within 7dte

recent examples:

Monday- short SPX strat sells 27-Nov 4490 4585 strangle ~1k times,

another fund sells 3500 of the 28-Nov 4380 Puts

short SPX strangle strategy executes two blocks every M / W / F

put seller executes DAILY

then at 2:30 CST, watch the 7dte volumes. Most of that is sold flow targeting near downside (~20d) and below
More...

Thank you, this is new to me and would love to understand this deeper.
 
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