For U.S. market, an option needs to have volume of greater than 500, open interest greater than 100, a last price greater than 0.10, and implied volatility greater than 60%.
Which option strategy is best for high volatility?
The strangle options strategy is designed to take advantage of volatility. A long strangle involves buying both a call and a put for the same underlying stock and expiration date, with different exercise prices for each option. This strategy may offer unlimited profit potential and limited risk of loss.
Is high IV good for options?
A high volatility indicates fear, uncertainty and wild extended swings in either directions (generally on the bearish side) in the markets. If you are an option buyer then a high Implied Volatility is fantastic for you as it increases the option price as they are a function of volatility.
Are options more expensive when volatility is high?
Higher volatility means higher upside risk or higher downside risk. When there is downside risk, the buyer of the call option will forego the premium. The same rule applies to put options too. That is why higher volatility makes call options and put options more valuable.
What should I trade when volatility is high?
When you see volatility is high and starting to drop you need to switch your option strategy to selling options. The high volatility will keep your option price elevated and it will quickly drop as volatility begins to drop. Our favorite strategy is the iron condor followed by short strangles and straddles.