Why we need to follow changes in Implied Volatility

What is implied volatility and why do we need to follow it? In essence, it’s the factor in the Options chains that “implies” the future move that is priced into the Options. If the implied move isn’t expected to be large, then the premium in the Options will be lower. That affects the way that I trade because I can’t get the same amount of “distance” in my credit spread trades. Because of this, I have to adapt and adjust my portfolio to account for this. 

 

About the Author Brian Keith

FREE DAILY TRADE VIDEOS

Join Over 84,750 Traders Receiving Our FREE Daily Trading Videos