📈 Options Advice
How to make more on your options trades right now.
Options Implied Volatility
Have you realized that recently you’re not getting the premium that you’re expecting when options move in your favor?
That is because we have seen volatility increase significantly in the market, causing implied volatility of options to rise as well.
Therefore, despite getting the moves you’re looking for, options aren’t paying out as much as they typically would.
I walked through it earlier this week, showing how average true range for stocks has skyrocketed recently. For example, TSLA ATR has risen from $5 to $17 and MSTR ATR has risen from $17 to $50.
You can see the move that MSTR made yesterday, dropping about $50 from the highs. This is no longer uncommon to see and you must plan for it.
How to Combat High IV
There are two things that you can do to combat high IV.
Purchase far out of the money options. By doing that, when you see a move in your direction, you can see gamma increase and deliver you the type of premiums that you’re looking for. Right now purchasing in the money or at the money options are not going to do much for you.
Buying puts/selling calls as a joint strategy or simply selling calls/puts. When the market isn’t paying out premiums, you can make money on the other side by writing puts/calls.
This is a topic I can go far deeper into and devote a video to if there is interest. I do walk through it in more depth in this video: