Shaun Richards from Not A Yes Man Economics and Mike Ingram, Strategist at BGC Partners, discussed how the VIX index works and how traders could trade the volatility via options.
Option traders keep an eye on Implied Volatility (IV) as rising IV adds to the option price and vice versa. Ingram and Richards dive deep into the options pricing model and discuss the concept of Implied Volatility and Historical Volatility.
Currently, VIX is very low ...to the point where experts say markets are complacent about near term risks. Though not a perfect indicator, option traders keep an eye on Implied Volatility (IV) as rising IV adds to the option price and vice versa. Moreover, VIX trading is simply putting a price to the volatility or uncertainty.
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