Trade Logic Unlocked

The Short Premium Accelerator

Trade Logic Unlocked

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 we’ve already talked about (a few different times), our profits as option traders are generated from three sources: direction, time, and volatility. Direction is completely random in the short-term, and time is obviously pretty reliable. But what about volatility?

Well interestingly, as premium sellers who are naturally short vega, volatility’s tendency to contract more often than it expands ends up being a nice, little accelerator to our profits.

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