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.
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