Options Jive

Monday – Friday | 8:40 – 9:00a CT

Using Implied Volatility to Our Advantage

Options Jive

For today’s segment of Options Jive, Tom and Tony analyze some common uses of Implied Volatility. Almost all of our conversations mention Implied Volatility(IV) at least once, so it is essential we know how and why we use it.

There are three primary applications of Implied Volatility:

  • Expected Move: Used for strike selection in options trades and identifying scalping zones.

  • Differentiating Expensive and Cheap Premium: Used to tell if options are trading expensive or cheap relative to their historical prices, which leads to strategy selection.

  • Adjusting Notional Values for IV: Used to equate underlying for the sake of diversification, pairs trading, etc

For today’s segment of Options Jive, Tom and Tony analyze some common uses of Implied Volatility. Almost all of our conversations mention Implied Volatility(IV) at least once, so it is essential we know how and why we use it.

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