Today, the market made a huge move up. A lot of people had bought call options on the index, ETF, Equities, etc. Even though the instruments went the direction as they wanted them to go, they lost money. Why? The answer is volatility crush. What this means is when you purchase the call options, they were expensive. When volatility is high, the market markers make the options expensive due to the huge “swings” in the market. When the market went up today, the volatility went down drastically. Therefore, all the call options that everyone purchased lost value since volatility went down.
To find out more information, please study the “Greeks” for options.
For EDUCATIONAL USE. Commodity Futures Trading Commission, Forex, Futures, Equity and options trading has large potential rewards, but also large potential risk and may not be suitable for everyone. You must be aware of the risks and be willing to accept them in order to invest in these markets. Do not trade with money you can not afford to lose. This is neither a solicitation nor an offer to Buy/Sell. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this document. The past performance of any trading system or methodology is not necessarily indicative of future results. All information provide d on the Blog is for educational purpose .
