Closing the Gap - Futures Edition

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Volatility Skew: Insight & Opportunities

Closing the Gap - Futures Edition

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

Crude Oil futures have been in the news due to the dramatic selloff in recent weeks. With this bearish behavior, the skew in crude options are at historical extremes with the Puts trading more richly than the Calls.

With this in mind, tastytrade's Pete Mulmat explains how to interpret this information and how to use it to set up a strategy that capitalizes on this volatility skew.

Then, the team looks to another product exhibiting skew, the British Pound (/6B), and applies the same context and a similar trade idea that involves this difference in put/call premium.

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