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10 Reasons to be a tastytrader

Implied Volatility Is Overstated

10 Reasons to be a tastytrader

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

In the fifth episode of the series, Dylan Ratigan and hosts discuss a trading pillar crucial to selling premium: implied volatility is overstated.

Current fear of future events is overly inflated, which is why tastytrade tends to sell option premium (since volatility is mean reverting and we're able to collect a larger credit on entry). But is this always true?

According to tastytrade research, volatility tends to be overstated more than 80% of the time. However, the most important aspect of measuring implied volatility is how high IV is relative to itself. Luckily, current technology allows us to identify these opportunities fairly easily and can aid us in choosing a derivatives strategy, ultimately improving our probability of profit and success long term. With that in mind, can traders be successful and get a "feel" for implied volatility levels without advanced technology? Dylan Ratigan and the rest of the tastytrade team weigh in.

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