Understand IV in option trading
Understand IV in option trading How much IV is good for options? IVP of 0 to 20 is regarded as extremely low IV, 20 to 40 is low, and here, traders look for buying options. IVP above 80 is regarded as extremely high IV, and traders typically look for selling options. Importance of Implied Volatility in Options Trading Implied Volatility is one of the important factors which affect the prices of options. Having a clear idea about Implied Volatility will help you to earn a good reward from your option trades. Today we will take a look at what Implied Volatility is and how you can use it to your advantage. Option premium: All of us know that when we trade options we are actually trading the option premium, and are actually betting on how the option premium will move in the future. There are 5 factors which determine what the option will be. These are: Price of the underlying asset: This is the actual price of the underlying in the spot market. When the underlying asset is traded in t