Low Volatility Option Trading Ideas

by | Oct 9, 2017

I’ve talked a lot this year about the dangers of shorting volatility during low volatility periods.  It just ends up being a low probability trade and this is true both for option trading and buying the inverse volatility products.  Now remember probability has nothing to do with result so just because something is a bad risk reward set up, that doesn’t mean it won’t get lucky and turn a profit for a little while.  It just means that on balance the risk is higher than the reward, but process and result are two different things.

We’ve seen plenty of that this year, that the higher the risk appetite a person had, the more profit they likely made.  But hopefully I’ve done a reasonable job over the years in explaining why this is a losing long term strategy.

I’m a process oriented investor, not a results oriented one, so my goal is always to just take the high probability trades that make sense and leave behind all the others.  If done enough times over a long enough time horizon, it definitely adds up to success.

So it’s very easy for me to say that we won’t be getting into any new short iron condor trades until volatility returns to these markets.  I’m extremely patient and I won’t chase bad set ups.

But…  for those of you who want to learn more about option trading, and more specifically what trades are available right now given the record smashing low volatility we’re seeing, I’ve put together a video highlighting a couple options.

 

Spoiler alert:  I will make a dedicated video eventually talking about OTM Put Calendars so for my more experienced option trading friends, I skipped that one for a reason.  To be continued.

 

But enjoy the video, and by all means ask any follow up questions you have:

volatilitytradingstrategies@hotmail.com

 

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