Ryan & Beef

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Why We Should Focus On Realized Volatility

Ryan & Beef

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

While realized volatility is backward-looking relative to implied volatility, market supply and demand dynamics and expectations of the future are typically shaped by what has happened in the past.

Therefore, we feel it's important to understand how volatile a stock price has typically been in the past, prior to making a trade on what its volatility will be in the future.

On today's show, Frank explains what realized volatility is and how focusing on this value can present us with potential opportunities for selling option premium. Understanding when the spread between realized and implied volatility is at its widest can help us enter short premium trades that have a higher probability of ultimately being profitable.


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