Trading Volatility

Windlesham1 said:
most people here want to be told what to do and want metrics they can hang their hat on-well here's the news- that's not how it works -the classroom is not the real world and vega will surprise those who think the BS calculations are carved in stone. That is my point and if you don't get it you clearly need to trade, and stop bleating
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Why don't you give an empirical example of how "vega can surprise."

I think a lot of people on here could benefit from that.
 
I think DYOR is the key vol expectations v reality -none of mine would make any sense as I trade the FTSE in the UK and I don't have the data to hand-it will happen soon enough when the naked sellers start crying
 
Windlesham1 said:
I think DYOR is the key vol expectations v reality -none of mine would make any sense as I trade the FTSE in the UK and I don't have the data to hand-it will happen soon enough when the naked sellers start crying
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How do you make vol expectations when you don't believe in vega?

I used to trade a lot of ftse.
 
Does IV affect FX options like it does indexes? I mean there is technically no "Bear" market in FX because they are multidirectional / buyers sellers each side. I can see that the options aren't priced equally. I imagine that this is due to the market going in one direction for a while.

What I'm saying is will IV rise in the direction it is going of the call / put options or fall?
 
CBC said:
Does IV affect FX options like it does indexes? I mean there is technically no "Bear" market in FX because they are multidirectional / buyers sellers each side. I can see that the options aren't priced equally. I imagine that this is due to the market going in one direction for a while.

What I'm saying is will IV rise in the direction it is going of the call / put options or fall?
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Skew dynamics in FX get complicated... The only rule is that there are almost no no rules.
 
Does any1 have any experience with CL options? I've been placing a few trades on CL and I think IV is less on the puts as the market moves in favor of them. I thought IV would rise on the puts when the market moves in their favor due to market drop. Mbey I'm trading a few to many strikes OTM.

Any advice would be good.

Thanks.
 
could you elaborate on what you mean by "naked option "? E.g. if I sell a put on Russel and buy a put on Spooz, am I trading naked options? If I sell 1 year NDF on RUBUSD and sell 3 month put against it?
 
To OP: think of three different vectors in options trading
-- trade direction of the underlying
-- trade volatility (realized or implied)
-- trade risk premium
Any trade you'd put on will include all of the above but in different amounts. You, as a trader, have to decide what vectors align with your strengths and which are not your expertise
 
Have a look at Short Bond vol vs Long Gold vol now and week after the FED announcement.
Those are correlated assets (30 day @ .40). But, only one is getting ready to move (rising IV).

Essentially, your long correlation. The next great product. Sell ZN-GC CORR futures at .80.
 
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