I’ve often traded weekly or near expiring options giving little regard to IV. However, i’m starting to dabble in longer calls and leaps.
Right now I have a basket of stocks on my watchlist related to Iran/USA/Global Instability, that I am intending to go long on. However I have limited experience analyzing whether the 15-20% increase in IV is worth entering positions. I’m left wondering if my thesis on these companies will just eaten away by the IV settling over time.
Does anyone have any experience entering long positions in periods on instability like this, or education to offer? Feels a shame to sit on the sidelines and watch as companies I wanted to enter continue to do well. Thanks.
Buy options at high IV or wait for IV to settle?
byu/ACivtech inoptions
Posted by ACivtech
5 Comments
Wait. When VIX is up it’s time to sell options, when VIX is down it’s time to buy them.
Leaps do not have elevated IV from what is going on right now really.
Honestly, if there is abnormally high IV on a stock you like or think will rally, buy the stock with leverage instead of the call that will almost certainly end up worthless.
reads as tho you want to buy options on defensive stock? you forgo the dividend and pay the premium on calls for a group of stocks that dont normally experience volatility. Iran is nearly out of munition, high likelihood the bulk of this war over in the next few weeks. or did you mean go long on sectors that will rebound when the campaign is over?
you shouldn’t just look at IV, but also IV rank. if IV is elevated but IV rank still shows it’s cheaper than other times in the year, it would still be worth going in. iv rank if your platform doesn’t automatically show it is basically
(current iv (minus) 52-week low iv)/(52-week high IV (minus) 52-week low iv)*100
anything below 40 is considered moderate, below 20 is cheap, above 60 is expensive