The SKEW, which measures the risk of outlier moves in the overall market, is at the bottom of its range.
What does this mean and how do we benefit from it?
It basically means that it's relatively safe to sell strangles against ETFs, such as SPY, QQQ or IWM, especially given the fact that the volatility (VIX) is still fairly high.
When the volatility is high then the option values are much higher, therefore option traders can have wider strangles then in low volatility environment and still collect the same amount of premium. Consequently the risk is reduced and the returns increase.
So what's my trade for today?
#LVS again. I already played the put side last week and only closed the call side today but after today's larger fall I thought I'd try my luck on the put side again.
LVS Daily Chart
Trade Type: Short Put
Expiry: 18 Nov
IV Rank: 72.1
Cap Req: $40
Annualised Prof at Expiry: 2592%
IMPORTANT: Studying previous trades provide the opportunity to everyone to learn a great deal so I encourage you to click on the links below and digest the info.