Options Jive

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Reaping the Rewards of Volatility

Options Jive

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

This segment of Options Jive takes a closer look at how premium and implied moves change with high and low volatility environments.

Recently, stock volatility has been oscillating around 20%. So let’s take a look at what happens to options in high and low volatility environments. As volatility increases, options become more expensive. This means premium will be greater in high volatility environments. Implied ranges and widths of options also increase as volatility increases.

Therefore, short volatility strategies reap large profits in high volatility environments.

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