Volatility Short

Discussion in 'Options' started by EliteTraderNYC, Feb 28, 2012.

  1. How often does this work - going short volatility for earnings/announcements?
  2. MTE


    How often this works depends on you ability to pick stocks that move by less than what the market prices in.
  3. It can "work" a majority of the time but you have to be wary of outlier-type losses. Be very careful with GOOG, pharma and bio-tech stocks. :eek: :cool:
  4. Yes, i wouldnt want to be caught in an outlier. So if say, a stock goes up 50% after earnings and you are short volatilty, you lose your shirt right?
  5. 1) It depends on if the volatility decay is enough to have offset the price fluctuation. That can happen with pharma and bio-tech. :cool:
    2) More than likely, you'd be nursing a loser. :( :mad: :eek:
  6. MTE


    Not necessarily. It all depends on what the market was pricing in. If the market was pricing in a 60% move then it would be a winner. If, on the other hand, the market was pricing in a 20% move then you would most likely have a loser.