Sep 25, 2012
63: The Low End of the Volatility Spectrum
Volatility Review: Vol didn't get a boost going into the weekend,
but it didn't sell off either. Very dull week in NASDAQ.
Listener Questions: The listeners direct the
Comment from Lee on Mark Sebastian's "Arrogant VIX Trade"
story: "Possibly one of the most honest and transparent
posts I've seen about a losing trade and the reasoning behind it.
Well done and thanks for the honesty. We have all been there,
fighting a losing battle because our head tells us we are right
when everything else is telling you otherwise. It really highlights
the need to follow a plan, stick to you risk reward no matter
what happens and act like a robot with no emotion when trading.
Facebook Question from Tom Sevens: “You guys are
always talking about the implied volatility premium vs. realized.
But it seems like implied vol is always priced at a premium to
realized, so is there ever a reason why anyone would want to do the
opposite trade - buy implied and sell realized vol?”
Tweet from @GIN4: “Are there any products out
there that replicate vol trades (straddles, iron condors, etc.) to
save me the hassle?”
Email from Ed S.: "I really want to understand
option volatility. I have even subscribed to sites that ANALYZE
volatility, but I can never figure out what to do with the number
it generates. I don't know if the result is particularly high,
medium or low. This is very distressing to me, because I know vol
is very important. But it simply eludes me. Your help is
Tweet from @TOMOTON: “Both Marks slammed buying
20,000 Feb 70 VIX calls for $0.15. What trade would you prefer to
Crystal Ball: Looking ahead to a slow upcoming
week in vol.