Options on futures new trading strategies and options on futures workbook
He is the coauthor of Options on Futures: John regularly writes for Investopedia. Reflections of a Contrarian on Investor Psychology. Measuring "Joe Option Trader" Sentiment. The Option Trading Crowd at Extremes. Pulling the Price Trigger. Sentiment Squeeze Play II.
Option Implied Volatility and Investor Sentiment. Testing Option Volatility on Equity Indices. Trading Against the Advisory Opinion Crowd. The Fourth Estate Crowd. Postscript on Crowd Psychology in Financial Markets. MetaStock Formula Language Code. Notes on System Testing. Factfulness Hans Rosling Inbunden. More importantly, though, if the level of the implied volatility derived from the model by plugging in actual prices and actual volatility and then computing solving the equations backwards is at an extreme high level relative to past levels, a reversion to the mean reaction may occur, suggesting this is a good time to both sell options and sell volatility.
If you are a buyer, you had better be careful about paying for these options, for the reasons sellers want to sell them. By looking at high and low ranges in a given time frame, say over six years, we can thus identify the following two key conditions for possibly selling options. Implied volatility should be greater than current levels of statistical volatility 2.
Implied and statistical volatility should be in their 90th or higher percentiles By using these two conditions as a screen, while not any automatic trader finder method, you should be able to narrow down the number of possible of trades, from which you can then drill down to the best possible setups.
Have a great trading day! Summa is Founder and President of OptionsNerd. Founded in , OptionsNerd. He coauthored Options on Futures: At Connors Research, we are using it as an overlay to many of our best strategies to make them even better -- now you can, too.