Learn About Extrinsic Value

This is a key to options trading! Find out why from our very own Mike Butler

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Options Jive

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Room for Opportunity

Options Jive

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Short premium positions are most profitable in high IV environments, and we trade IVR > 30 as a rule of thumb to ensure this. However, if IVR becomes skewed, there may still be short premium opportunities when IVR < 30. With all the major index ETFs having IVR < 30, is there still room for opportunity? Comparing the current IV with the 10-year average IV for each index, we can see that each market index has the potential for significant IV contraction and profitable short premium opportunities.

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