Trading options volatility by John Nelson and Stephen Kreis
ARTICLE SYNOPSIS ...Trading options volatility
by John Nelson and Stephen Kreis
The objective in trading options is generally a rather straightforward one--buy the premiums low and
sell them high. For many traders there is no need to make ""option action"" any more complicated than
that. Other option investors like to take a more in-depth look at the factors that affect the premium level
to develop their trading strategies.
Volatility is the most important factor affecting option premiums. In fact, some traders only take
positions based on volatility, and are always neutral with respect to price. Knowing volatil...