To The Moon

We already know that indicators like IV/HV can tell us whether an option’s implied volatility (IV) is high or low.

So here’s the next question: how can you capture opportunities as IV moves up and down? And does high IV favor buyers or sellers? 🤔

📘 Let’s see how The Options Handbook explains IV:

▶ IV Is Cyclical and Emotional

Implied volatility isn't random; it usually moves back toward its average over time, fluctuating between market anxiety and calm periods.

• When markets panic, IV can shoot through the roof, but it rarely stays there.

For example, $NVIDIA(NVDA)$ saw its IV surge to 93.39% on April 8 this year, then drop by 40% just days later.

• When things are too quiet for too long, traders start bracing for surprises, and IV creeps up again.

▶ How Buyers and Sellers Approach IV

• Buyers: Prefer low IV contracts — cheaper premiums, and they benefit if IV rises.

• Sellers: Prefer high IV contracts — higher premiums, and they profit if IV falls.

▶ Key Takeaway 💡

If you want to position ahead of a big market event, always judge whether IV is currently high or low.

Otherwise, you could get the direction right but still lose money on the option.

🎁 The Options Handbook includes more insights on IV’s market patterns — now available in the Tiger Coin Center! 🛒

>> Redeem Options Handbook Now <<

>> Click here for the Simplified Chinese version <<