Options Trading Strategies - Wrong Use of Historical Volatility and Implied Volatility Crossovers

Where can I teach me to trade options with consistent profits centered on Implied Volatility without Historical Volatility

? Keep to the link below, entitled "Consistent Results" to view a model retail option trader's portfolio that excludes the use of HV and targets trading only IV.

I'll cite these actual historical events, to bolster the argument for removing Historical Volatility from the trading process altogether.

27 Feb, 2007: Widespread Panic from the sizeable China sell-off in equities. Had you been trading the choices of an index such as the FXI which may be the iShares product of China's 25 largest and quite a few liquid Chinese companies though listed in the usa; but you are headquartered in China, you'll are already impacted. While you are able to argue you can have market events recreate the ranges in the Dow, Nasdaq & S&P, how would you recreate the scenario from the VIX and VXN soaring 59% and 39%?

22Jan, 2008: Fed cuts rates by 75 basis points prior to the scheduled policy meeting on Jan 30th, whereby the FOMC cut another 50 basis points around the date of the meeting. Should you be trading interest-rate sensitive sectors using the choices on an economic ETF or perhaps a Banking Index just like the BKX; or, the Housing Index like the HGX, you'd happen to be impacted. And in the present environment of rates being near zero, the FOMC while they still need an interest rate policy tool, they cannot cut rates through the same number of basis points like before. That which was a historical event just isn't successively repeatable in the years ahead, not until rates are raised again and subsequently they get cut again.

Question: How can you reconstruct history? That is the history of events forming Historical Volatility. The reply is within the real examples cited, just like any other financially related historical event - you can't reconstruct history. You could possibly mimic aspects of HV but you cannot repeat it in their entirety. So, in case you continue using HV-IV crossovers, you visually confuse yourself by seeking volatility "mispricing" patterns that you want to see; but, you'll be with poor profit performance instead. It makes more practical trading sense to concentrate purely on IV; then, diversify the trading of volatilities across multiple asset classes beyond equities.

Where can I learn more about trading IV across multiple asset classes only using options, without needing to own stock? Keep to the link below (video-based course), that utilizes IV Mean Reversion/Mean Repulsion and IV Forecasting, as reliable methods to trade the implied volatilities across broad-based Equity Indexes, Commodity ETFs, Currency ETFs and Emerging Market ETFs.More info of options trading

Options Trading Strategies - Wrong Use of Historical Volatility and Implied Volatility Crossovers

By: Anton Romero

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