IV Off the Charts

This article explores the selling of premium that option traders should be considering due to the increase in volatility and overpriced premium.

In our option classes, we teach students to be premium sellers when the IV (implied volatility) is high. Most of the time when we go through various examples, we find the IV to be somewhere between the extreme high or extreme low. Due to the recent crash caused by the S&P downgrade of the US and the temporary bounce back caused by Ben B. and the Fed team, the IV has peaked at levels not seen in a year.

We have selected a few exchange traded funds to shows those extremes.

Options

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