Which trades are used when volatility is low?


What is a Option Straddle?
What is a Option Strangle?
What is a Option Backspread?
How is volume used to identify trades?
Which trades are used when volatility is high?
What is a Option Ratio Spread?
How do you calculate probability of profit?
Understanding Stock Options Volatility Trading
How is a volatility extreme identified?

Low Volatility Trading

When volatility is low, option premium is also low compared to what it would be if volatility were at its mean. To take advantage of this low volatility, you want a trade that profits when volatility increases and is independent of the direction stock price moves. The trades that fit these criteria are straddles, strangles and backspreads.

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Friday, Aug 29, 2008