How To Render Implied Volatility Obsolete...
Thursday, August 24, 2006 at 07:53PM
(This is in response to my last post a few minutes ago...read that one before you read this!)
How to render Implied Volatility Obsolete.....
Buy deep in-the-money options.....if you dare!
Remember, Implied Volatility can only affect the time value of your option causing it to get bigger or smaller. If you buy deeper ITM options, you are buying less time value, which in turn will have little to no effect on your option price. I know many traders who want to skip over volatility by doing this, which is fine. I will discuss the issues I have with deep ITM options some other time. As you can see by my picture, I don't think too highly of them.
Goodnight!
How to render Implied Volatility Obsolete.....
Buy deep in-the-money options.....if you dare!
Remember, Implied Volatility can only affect the time value of your option causing it to get bigger or smaller. If you buy deeper ITM options, you are buying less time value, which in turn will have little to no effect on your option price. I know many traders who want to skip over volatility by doing this, which is fine. I will discuss the issues I have with deep ITM options some other time. As you can see by my picture, I don't think too highly of them.
Goodnight!
Reader Comments (3)
Deltatrader
I'm a commenting fool tonight. You asked for it though Jeff
Deltatrader