Trading options volatility by Andrew J. Sterge
ARTICLE SYNOPSIS ...Trading options volatility
by Andrew J. Sterge
Options are much more than a hedging vehicle or leveraged way of participating in spot or futures
markets. Indeed, options create strategies that did not exist before in trading an option's underlying
instrument. These strategies are known as volatility trades and the benefit is that you usually don't have to
pick market direction, something always tough to do. Instead, you bet on whether an option's volatility is
cheap or rich, in other words, undervalued or overvalued.
The term volatility is used with abandon in discussions of options, this on...