Volatility is at Record Lows... How to Trade It!

Discussion in 'General Discussion' started by BettyC.Mattingly12, Jul 14, 2018.

  1. BettyC.Mattingly12

    BettyC.Mattingly12 New Member

    There was a good article published at Zero Hedge today:
    Part of the article says:
    "Now one can easily simply buy straddles in all of these markets. I expect you’ll only need one or two of them to surprise volatility sellers, resulting in you getting that new Porsche 911 you’ve been looking at. By buying straddles you don’t have to care which way the market moves, as long as it moves and complacency disappears or even subsides sending volatility higher.
    Right now Chris and I have been discussing a 4.5 year long dated option, which I’ve recently recommended. The particular stock needs to move by 9%! 9 freaking percentage points! Just yesterday it moved 1% in a day! We have 4.5 years to break-even. Opportunities like this don’t roll around every day but right now we have a plethora of them and I’m feasting."
    Is anyone looking at longer term straddles or strangles?
     
    Last edited: Aug 1, 2018
  2. ACS

    ACS Well-Known Member

    4 year volatility will most likely move less than you expect. That doesn't mean the trade will not make money but it may not be a home run.
     
  3. status1

    status1 Well-Known Member

    Wow you must have a lot of patience and time on your hand
    Good luck with that trade

    I assume you are not talking about SPX since the volatility it's not at the lows Just wondering what stock or market you are looking to do it in ?
    Sure it may move but it may not be in one direction What if it moves 8% in one direction ? Are you going to reposition or adjust the trade or leave it alone for 4.5 years ?
    It sure would be a waste if it goes up 8% in 4.5 years and than come down to the same price as it is now So now you not only lost on the option but you also wasted 4.5 years waiting for something to happen
    You could have placed a short put spread in spx and with just 2% per mo on margin you could have doubled your margin
     
  4. status1

    status1 Well-Known Member

    I just took a look at that article
    It may have been published today but that is an older article from 2014 according to the date on it
    I knew something was fishy about it since we do not have record low volatility today
    That should have been published in 2017 when it was a record low volatility to have any meaning but even then I would not be trading it
     
    Mark17 likes this.

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