Saturday, August 4, 2007

The Power Of Implied Volatility

I really amaze How Option can Benefit you regarding of the stock price.

My GS 180 call and 185 put option Price suddenly increase even though the STOCK price (181+-) never move.

This is because of the change in implied volatility - one of the fundamental (but yet basic 101 options knowledge).

On my GS, Im buying ATM / OTM options. I was paying for extrinsic value. So, if a change in the direction in my favour (delta), and/or a surge in implied volatility (which my position will benefit because of the long vega), will help me make money.

That's the reason.

4 comments:

Edward said...

Hi,

I enjoy reading your sites.

Options surely an interesting subject, would you by any chance give guidance on options paper trading?

Hope to hear from you soon.

lawrence said...

Hi Edward,

Thank you for reading my blog =) . I dun quite get what you mean by options paper trading.

Do you mean how to set up an paper trading account ?
Do you mean how to trade with Options ?

regards,
Lawrence

Anonymous said...

nice blog.which site do you use for paper trading and which site would you recommend for paper trading in options.

Anonymous said...

hi, nice blog

have you found a good trading system ? please share it.

thanks