Strategies for IRA

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Long Implied Volatility Strategies

Strategies for IRA

On the tastytrade network, you will rarely hear Tom talk about buying option premium or implied volatility, but today’s Strategies for your IRA segment presents one of those rarities. Owing to the recent lows in the S&P 500 Implied Volatility Index (VIX), Tom has been forced to talk getting long VIX.

While he still does not advocate for buying options when VIX is low even though they seem “cheap,” playing a price extreme is another topic. When buying options in a low implied volatility environment, a trader needs the market to move further than expected to make money at expiration. With long VIX strategies, traders simply need some fear to enter the market and not necessarily a bunch of movement.

Tom and Tony summarize some of their favorite ways to buy VIX by starting with the synthetic long position. From there, the guys add some short premium against the synthetic long to give them room to the downside with strategies like the covered call or the simpler short put.

Check out what Tom likes and doesn’t like when looking to buy VIX in the segment above.

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