Elite Traders Leverage Option Implied Volatility for Strategic Gains
Implied Volatility (IV) serves as the cornerstone of options trading, dictating pricing and risk through market expectations of future asset fluctuations. Unlike historical volatility, IV projects forward, embedding anticipated movements into option premiums until expiration.
The calculus is clear: rising demand inflates option prices, lifting IV—a direct boost to extrinsic value. Sellers face headwinds as premiums climb, while buyers capitalize on volatility's ascent. Vega, the Greek measuring IV sensitivity, becomes indispensable for navigating these shifts.