Post feedHow To Render Implied Volatility Obsolete...
(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!
I'm really looking forward to your thoughts on this. I'm not sure I understand the advantages of going ITM.
Posted by
Anonymous |
8/24/2006 08:47:00 PM
You could also buy deeper out the money to reduce the effects of Implied Volatility. ATM long term options are the last thing you want to purchase. Just don't hold OTMS to expiration.
Deltatrader
I'm a commenting fool tonight. You asked for it though Jeff
Posted by
Anonymous |
8/24/2006 10:12:00 PM
You are the man Jeff but did someone call you a JEDI in comments of your last blog? You remind me more of Jar Jar Binks.
Deltatrader
Posted by
Anonymous |
8/24/2006 10:15:00 PM