On today's Live Trading Class, we noticed an anomaly across the boards on option pricing. Not only was there a significantly higher than normal amount "priced in" on the ATM options, but also IV levels are scorching. This is a sign of things to come. Implied Volatility (IV) is the measurement of potential future movement, and when it increases, that typically means stocks are likley to drop. While I am not trying to be a fear monger, nor do I have a crystal ball, I think it would be prudent to be cautious in this current environment. The Market is telling us it is gearing up for a down move. If it does, are you prepared?
A Word of Caution!
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- Category: General
- Written by OptionDave