I think the best trade would be selling ITM puts that way i can profit from the collapse in volatility and the large move higher. But selling ITM puts is extremely risky and requires a lot of margin. So is it smarter to buy OTM or ITM calls instead considering the volatility collapse will reduce the price of the calls? Edit: I'm referring to the S&P options.
When IV is high, you can sell credit spreads instead of straight puts or butterfly spreads. YOu might look at the SKF, which moves inverse to the financials but by 2x as much. careful out there.
If you want to benefit from the skew, buy otm calls and go long gamma! Don't wait for expiry either, if you get major outperformance you can then scalp some gamma by SELLING ITM calls (at high IV to boot), bringing you closer to delta neutral. Keep in mind this is an action based on the strong belief the market will rally. By itself it has a negative expectation. If you are right in your belief, you'll get paid for it. If not, well, you know the rest. Held my nose all week buying OCT SPY calls.