Hi guys! I'm new to option trading. I built a script that predicts the next two day's IV30 with pretty good accuracy. But since I'm newbie. I don't really know I can use this information with a good strategy. Any ideas?
If your projected IV30 is sufficiently different from today’s IV30, you can buy (or sell) the options used to calculate your IV30 if the projected IV30 is greater (or less than) today’s IV30.
If you can predict the IV30 better than the market, then you will profit on average. You also have to be sure that the realized volatility over the two days doesn’t negate the expected effect of IV increase/decrease.
Patelioo on
How are you predicting the 30 day IV? Are you using a statistical model for your script?
I think you can profit by being short on IV when IV is high and long on IV when IV is low. (just google these and you should find strategies…)
Also I agree with the other comment that says you have to be sure that the RV doesn’t negate the expected effects of IV.
2 Comments
If your projected IV30 is sufficiently different from today’s IV30, you can buy (or sell) the options used to calculate your IV30 if the projected IV30 is greater (or less than) today’s IV30.
If you can predict the IV30 better than the market, then you will profit on average. You also have to be sure that the realized volatility over the two days doesn’t negate the expected effect of IV increase/decrease.
How are you predicting the 30 day IV? Are you using a statistical model for your script?
I think you can profit by being short on IV when IV is high and long on IV when IV is low. (just google these and you should find strategies…)
Also I agree with the other comment that says you have to be sure that the RV doesn’t negate the expected effects of IV.