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The Option Alpha Podcast

175: The Impact of Volatility On Options

The Option Alpha Podcast

Kirk Du Plessis

Investing, Trading, Stock Market, Business, Options Trading, Education, Finance

4.81.2K Ratings

🗓️ 8 April 2020

⏱️ 51 minutes

🧾️ Download transcript

Summary

Show Notes: http://optionalpha.com/show175

Stock trading is easy to understand conceptually because it's one-dimensional. Either the stock goes up or it goes down. Clear and simple, at least from a trading and profit or loss perspective. Options trading, however, is multi-dimensional. Price, time, and volatility all impact the value and price of an options contract. On today's show we're selectively choosing to highlight the impact that volatility has on options because, as we've seen in the 2020 market collapse, if you're not managing volatility, it could become your worst nightmare.

Transcript

Click on a timestamp to play from that location

0:00.0

So stock trading is easy and understand conceptually because it's one dimensional.

0:03.3

Either the stock goes up or it goes down.

0:05.4

Clear and simple, at least from a trading and profit loss perspective.

0:08.8

Options trading however is multi-dimensional.

0:11.4

Price, time, and volatility all impact the value and price of an

0:14.9

options contract. On today's show, we're selectively choosing to highlight the impact of

0:19.6

volatility on options because, as we've seen in the 2020 market collapse if you're not

0:24.7

managing volatility it could become your worst nightmare.

0:27.2

You're listening to the option alpha podcast from option alpha

0:31.0

dot com where we show you how to make smarter trades, learn how the stock market really works and generate consistent monthly income.

0:39.0

Now, your host, and head trader at Option Alpha.com, Kirk Dupluses.

0:45.0

Hey everyone, this is Kirk here again from Option Alpha.com, working every single week to make

0:50.0

this the most popular investing podcast offered online because it's based on one

0:54.0

thing and one thing only and that's helping you guys consistently place smarter

0:58.4

more profitable trade so again thank you so much for tuning in today on today

1:02.1

show we're going to be going through the impact of volatility on options.

1:06.0

And this is actually kind of the sister episode to show number 135, where we dove deep into how you figure out this implied volatility number, how it's calculated,

1:17.5

where it's derived from. We'll cover a little bit more of that on surface level today on the show, but these two shows are meant to go together.

1:25.2

Show 135, if you want to pause and even go listen to it again, is meant to dive deep into what implied volatility is specifically.

1:32.1

Now today on show 175 175 we're going to talk about the impact of

1:36.4

volatility on options, different contracts, spreads, time, all of these things that could really, really help you out. Now as you know,

1:45.0

2020 saw the biggest volatility expansion in more than a decade, and it rocked a lot of people.

...

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