In stock trading, the stock price is determined by the relationship between supply and demand;
In futures trading, the futures price can be determined by the spot price;
In option trading, the price of option contract is also related to volatility. The increase of volatility will make the call/put option contract price rise, which of course needs to be calculated in combination with the rise and fall of the subject matter.
We can adjust our options trading strategy according to the volatility of 50ETF, so as to optimize the income. Sometimes the option buyer can "avoid the double-kill" market.
One is to do more volatility, that is, when the volatility is relatively low, buy subscription or buy bearish.
One is to short the volatility, that is, when the volatility is relatively high, sell the call or sell the put option.
Of course, the judgment of the direction is correct. In the right direction, combined with the rising volatility, as an option buyer, the contract price of its position will rise rapidly, especially when the virtual first gear becomes flat or even real, its increase is almost the biggest.
If the direction is wrong, the contract price loss of the option buyer's position will slow down.
Therefore, some professional players will build a buying strategy when the volatility is low, that is, buy subscription+buy bearish. At this time, the market performance of the market is: the increase is far greater than the decline. The rising contract accelerated to rise more, while the falling contract fell limited. Or there is a phenomenon of selling and buying double red!
When the volatility is high, short the volatility and build a selling strategy, that is, sell subscription+sell bearish. At this time, the performance of the market is: the decline will be greater than the rise, the decline will be more, and the rise will be less. Or sell and buy.
It is also unreasonable that the volatility in the previous period remains at a high level, and the time value of flat options is as high as 700 to 800 yuan. The seller's market can use strategies such as double selling, hedging and spread to eat this time value safely.
The buyer's market should pay attention to the losses caused by the decline in volatility and participate in virtual contracts more cautiously. In the case of falling volatility, it is suggested that real value contracts should be the main way to open positions.
The above is about how to do the volatility of options, I hope it will help everyone.
This paper borrows the knowledge planet from the public view option.