One of the biggest mistakes an options trader makes is not taking into account whether that option’s current implied volatility is high or low for that option…
If the Implied Volatility (IV) is artificially high or inflated because of pending news or earnings for example, then it’s going to take a much bigger move in the stock price for that option to be profitable.
Otherwise, you can still be ‘Right’ in the direction of the underlying stock… but still lose money….
If the option volatility is artificially high, then the options price will also be inflated and it will be much harder to make money on the trade.
For example: Let’s say you had determined that XYZ stock was going up this week, and wanted to capitalize on the short-term upward movement on the stock. To increase your leverage and buying power, let’s say you bought 10 of the At The Money XYZ Call options, representing 1000 shares of XYZ.
The stock breaks out to the upside, and runs 5 points in 3 days. And if you had bought the stock, you’d be up $5000! But you go and check your options price, and it’s only up $1, hardly enough to cover your commissions and the bid/ask spread.
It’s agonizing and frustrating, and sometimes leads people to stop trading options altogether… But what they don’t know (and sometimes never learn) is why they lost money on the trade!
We’ve just put together a new software program that quickly and easily calculates this for you and graphs it in an easy to read format… It’s truly remarkable.
Our revolutionary new software will allow you to quickly and easily compare the current Implied Volatility (IV) of that option, and compare it to what it’s historically been selling for.
This is incredibly powerful, because it tells you whether an option is ‘Cheap’ or ‘Expensive’ and therefore when to Buy or Sell that option.
Within seconds, you can see exactly where the volatility for your stock’s option is trading, and be able to compare it to where it should be trading.
This simple (yet disarmingly powerful) tool instantly shows you if a particular option is over-priced or under-priced, and therefore whether you should be buying or selling.
Just key in your stock symbol, click a few buttons, and let the Volcone Analyzer 3.0 will do the rest. It will perform thousands of complex calculations, and in seconds it will create a chart much like the one below, graphing it right before your eyes.
Never before have you been able to graphically determine the implied volatility of an option compared to it’s actual historical volatility for similar time periods.
If all this sounds confusing, or you’re not familiar with these terms, it’s ok because all you need to know is that if the ‘Red or Blue Dot’ is above (or outside) of the volatility cone, the option is over-priced and if it’s below, the option is under-priced!
We hired a top financial programmer to create this software exclusively for us, based on secret proprietary algorithms. It’s involves complex calculations, and enough number crunching to keep a team of mathematicians busy for weeks…
But you’re about to find out how to get your hands on this tremendous software, which will do all this for you in a matter of seconds.
And we’ve just made the Volcone even BETTER with… Read more…