This segment of Options Jive takes a closer look at low volatility environments and what it means for trading.
Currently, the Eurozone currency is moving at about half of its historical average range. The Eurozone currency’s volatility is lower than average, but the implied volatility (IV) overstatement is normal. This means short premium trades can still be profitable in the low IV environment. When volatility is low, we prefer not to trade long premium trades, but to trade short premium trades.