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Market Measures

Monday – Friday | 9:00 – 9:20a CT

Measuring Premium

Market Measures

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

As IV increases, we tend to see greater profits as premium sellers with roughly the same success rate. So what about the credit we collect? How does that change in varying IV environments?

Study
  • SPY, 45 DTE
  • 16 delta strangles
  • Since 2005
  • Recorded average premium collected as % of stock price in varying IV environments

We find that on average, we collect 1% of the stock price in premium, and in higher IV environments we can collect double that.

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