Volatility Skew
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| Whereby deep OTM options tend to have higher Implied Volatilities than ATM options. This type of discrepancy again gives the trader the opportunity to make trades whose profits are determined by volatility action as opposed to directional price action. |
Related Terms: | ||
Directional Trade A trade that requires the underlying asset to move in one direction in order to produce ... Volatility The magnitude of price (or yield) changes over a predefined period of time. The amount by ... Volatility Stops Monitoring implied volatility is critical in long neutral delta trading. Check the current volatility of the ... | ||
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