by LarryStink
Options vol continues to get crushed day in and day out, and as more and more funds incorporate option selling strategies this is a trend that will continue. Understanding the Dealer/Market maker exposure and their hedging strategies can help you avoid death by paper cuts as realized volatility is often overstated and be on the right side of the trade. Many weeks that means selling delta neutral and taking advantage of a sideways market.
finance.yahoo.com/news/options-volatility-getting-crushed-little-223429085.html
TLDR
Learning to read volatility will help you position better to avoid theta losses, and only buying options when realized volatility is increasing and coming more in line with implied.
The $VIX historical average is 19.47 dating back to it's 1990 inception.
Currently VIX is sitting at 11.93.
We are sitting at the bottom 3-5 percentile in VIX's history. Look at the few # of occurrences below the blue line vs the many above it. Hmm
Extrapolate how you see fit. pic.twitter.com/0J4vSgqBNP
— Heisenberg (@Mr_Derivatives) May 28, 2024