IVR

Wood_Ring

If I recall correctly, Cem Karsan had some research indicating that it was net profitable to sell vol at the extremes– high IV and low IV– and the worst time was actually when IV is around the mid-point. Low/high and cheap/expensive are relative terms. Low IV is not synonymous with cheap vol, just as high IV is not necessarily the same as expensive vol. Options markets are much more nuanced than that.  Something like high or low IVR should only be a starting point in assessing whether vol is over/underpriced, not the determinative metric; otherwise you become a prime target for adverse selection.

Wood_Ring

If you’re selling volatility mechanically based on something like an IV rank >50, which is more or less what Tasty espouses, then you need it to be true that there is such a thing as a volatility risk premium; that this premium is sufficiently high to be worth the time, risk, and effort; that the optimal time to try to capture this premium is when IVR is high; that the variance of this strategy is not so high that you are at risk of blowing up your portfolio; that all of this is true for the specific underlying(s) you are trading; and that all of this will continue to be true in the future.  There is evidence to suggest that a volatility risk premium does generally exist, and it’s conceivable that it will persist into the future, but it’s much less clear that this is true across all underlyings, that the optimal way to trade this is by selling volatility in general, and puts specifically, in a mechanical fashion based on IVR, and/or that this will all be true going forward. So the rough patches would come from variance, as well as instances where your underlying assumptions are either not correct from the start, or (maybe worse) your underlying assumptions were correct at some point but no longer hold true, but you don’t realize it until you’ve sustained significant losses.  All of this is to say that trading options requires a lot more reflection and attention to detail than one might come to believe based on Tasty’s content alone. Again, that’s not to say it’s impossible to be profitable by just selling puts mechanically, but that’s a riskier proposition than it might at first seem.

Frequent-Sympathy663

IVR has nothing to do with RV so you can sell Gamma and still make money (and usually VRP high in a low vol environment

Dumbest-Questions

Sorry, what does R in IVR stand for?

ImpressiveAd1518

Thanks for the reply, where could I go to see IVR of my options? I typically use Robinhood for buying/selling and Tradingview for charting. I have an IV rank suite indicator I looked at on Tradingview but it didn’t seem the most accurate compared to what I’ve been observing on Robinhood.

Ok_Butterfly2410

Yeah, thats what im saying. IVR means nothing. You gotta track the IV surface of the specific options you trade.

thekoonbear

Sure that’s what IVR is. But it does not necessarily mean that it’s too high or too low.

Ok_Butterfly2410

Knowing when IV is high or low is what IVR is. But, if you don’t map it out yourself for your specific options, the underlying IVR means nothing. You just gotta start tracking it everyday is where im at with it lol. You’ll see days where IV and underlying price both fall, days where they both rise, and days where they move inversely like normal. Days when underlying price and IV are falling are good days to buy. Days when underlying price and iv are both rising are good days to sell. In between is normal chugging dont do anything.

teddyevelynmosby

Super, I will look it up. I have Schwab checking account for intl travel but haven’t touched on investing. If they have IVR IVP type of tracking that will be amazing. One thing that fidelity ATP is missing. And the way they display price always bugs me. That is why I went with RH.

External-Band-414

# Here are the indicators, provided by algorithm I developed-->SPY The SPY ETF exhibits a bullish sentiment as it shows strong momentum and positive technical indicators, suggesting potential opportunities for call options. Algorithmic Consensus # STRONG BULLISH BIAS Based on 7 technical & volatility metrics 6 Bullish 1 Bearish # Moving Average (50-day) Current price is above the 50-day MA bullish A price above the 50-day moving average indicates a potential uptrend, signaling options traders to consider bullish strategies. # RSI (Relative Strength Index) RSI level at 65 bullish An RSI above 50 suggests that SPY is in a bullish phase. However, caution is warranted as it approaches overbought territory. # VWAP (Volume Weighted Average Price) Current price is above VWAP bullish Trading above the VWAP indicates strong buying interest, making it a favorable condition for bullish options strategies. # MACD (Moving Average Convergence Divergence) MACD line is above the signal line bullish A bullish MACD crossover suggests upward momentum, providing a signal for traders to consider long positions or call options. # Bollinger Bands Current price is near the upper band bearish Being near the upper Bollinger Band may indicate a potential pullback, suggesting traders should be cautious with aggressive bullish positions. # Implied Volatility Rank (IVR) IVR at 30% bullish A low IVR indicates relatively cheaper options premiums, allowing traders to buy calls at a lower cost, potentially increasing profit margins. # Put/Call Ratio Current ratio at 0.5 bullish A low put/call ratio reflects bullish sentiment among traders, suggesting a higher likelihood of price increases, making it attractive for call options.

External-Band-414

# GME The current market sentiment for GME suggests a cautious bullish outlook, driven by recent price recoveries amid high volatility. Algorithmic Consensus # STRONG BULLISH BIAS Based on 7 technical & volatility metrics 5 Bullish 2 Bearish # Moving Average (50-day) Current price above MA bullish The current price being above the 50-day moving average indicates a potential upward trend, which can be a signal for traders to consider bullish options strategies. # RSI (Relative Strength Index) RSI level at 65 bullish An RSI level above 60 suggests that GME is in a strong upward momentum, indicating that options traders might look for call options or bullish spreads. # VWAP (Volume Weighted Average Price) Current price above VWAP bullish Trading above the VWAP means that the majority of the trading volume is at lower prices, signaling bullish sentiment and suggesting favorable conditions for buying calls. # MACD (Moving Average Convergence Divergence) MACD line above signal line bullish The MACD being above the signal line indicates positive momentum, which could present a good opportunity for traders to enter long positions or calls. # Bollinger Bands Price near upper band bearish While price nearing the upper Bollinger Band suggests potential overbought conditions, options traders should be cautious and may consider protective puts or spreads. # Implied Volatility Rank (IVR) IVR at 70% bearish A high IVR indicates elevated options premiums, making selling strategies like covered calls attractive, but may also suggest caution due to potential price corrections. # Put/Call Ratio Current ratio at 0.5 bullish A low put/call ratio indicates that bullish sentiment is prevalent among traders, suggesting that options traders may want to focus on bullish strategies like buying calls.

External-Band-414

Here is for TSLA from the algorithm i developed-->Moving Average (50-day) Current price above 50-day MA bullish A price above the 50-day moving average indicates a potential upward trend, suggesting that call options may be favorable. # RSI (Relative Strength Index) RSI at 62 bullish An RSI above 50 suggests bullish momentum; traders might consider buying calls or bullish spreads. # VWAP (Volume Weighted Average Price) Current price above VWAP bullish Trading above the VWAP indicates that the stock is being bought at higher prices, which may signal a bullish trend for options traders. # MACD (Moving Average Convergence Divergence) MACD line above signal line bullish A bullish crossover in the MACD suggests upward momentum; options traders might look for bullish positions. # Bollinger Bands Price touching the upper band bearish While touching the upper band indicates upward momentum, it also suggests potential overbought conditions, cautioning against aggressive bullish options. # Implied Volatility Rank (IVR) IVR at 30% bearish A low IVR indicates that options are relatively cheap; traders might consider selling options or using spreads as a strategy. # Put/Call Ratio 0.7 bullish A low put/call ratio suggests bullish sentiment among traders, making it a favorable environment for bullish options strategies.

External-Band-414

# Moving Average (50-day) Current price is above the 50-day MA bullish A price above the 50-day moving average indicates that the stock is in a short to medium-term uptrend, making call options more attractive. # RSI (Relative Strength Index) RSI level is 62 bullish An RSI above 50 indicates bullish momentum, suggesting that the stock may continue to rise, which is favorable for bullish options strategies. # VWAP (Volume Weighted Average Price) Current price is above VWAP bullish Trading above the VWAP suggests that the stock is being accumulated, making it a favorable environment for buying calls. # MACD (Moving Average Convergence Divergence) MACD line is above the signal line bullish A bullish MACD crossover indicates that upward momentum is likely, which could lead to price increases, benefiting options traders with bullish positions. # Bollinger Bands Current price is near the upper band bearish Being near the upper band may indicate overbought conditions, suggesting a potential pullback, which requires caution for aggressive bullish strategies. # Implied Volatility Rank (IVR) IVR at 40% bullish A higher IVR suggests that options are relatively more expensive, which can benefit traders selling options or using spreads to maximize returns. # Put/Call Ratio Current ratio is 0.6 bullish A lower put/call ratio indicates bullish sentiment among traders, suggesting that more traders are betting on upward price movement, which supports bullish options strategies.

Krammsy

I took notes on every trade going back to 2008, where it felt necessary to document my mistakes to learn from them. Once I got into options, it was a new tier of failures, so I kept going back through my trade notes to no avail, there was nothing to learn. With options it turns out the things that were killing me were the things I didn't even know to note. The Greeks. If you're trading options & taking notes, those notes are worthless if you haven't recorded IV vs HV (or IVR), position net Delta, Theta & Vega - and how you're hedging. That's a bit much, though possible, what's more important is actually knowing the current value for each of those, what to expect and how to protect yourself. .

Krammsy

I don't think you know what Vega is, Tasty has a plethora of earnings strategies, those are Vega plays....IV. What bugs me is the way they completely depend on IVR without discussing Vega hedging.

AlpsFamiliar5888

Some people are into pre-market scalping. They say it's more predictable. Vol comes and goes, you can sort by IVR and get the hot stocks of the season

Timely-Client3911

**On pricing:** Currently using Black-Scholes with dividend adjustment (European approximation) for speed in the production version. I also have a binomial tree implementation for American options, but it's \~15x slower and for SPY calls the early exercise premium is minimal, so BS has been accurate enough for the probability analysis. **On IV/IVR:** Yes! The tool pulls live implied volatility surface data from market options chains across multiple strikes and expirations. I'm not using raw IVR percentile ranking yet, but I am using: * Real-time IV surface (not historical vol) * GARCH(1,1) for short-term volatility forecasting * Time-varying volatility in the Monte Carlo paths **What I don't have yet:** * Multi-year IVR percentile tracking (great suggestion - would help identify overpriced/underpriced vol) * Vol regime classification (high/low IV environment) Would IVR percentile ranking significantly change your trade selection process? I'm trying to figure out if that should be prioritized for v6 or if the current IV surface + GARCH combo is "good enough" for most retail traders. Always open to feedback from experienced traders - this is exactly the kind of input I need to make this useful for real trading decisions.

Thump604

You using Black Scholes? You have a year of IVR?

dimdada

I sold IVR, been holding it long enough to help offset some great gains this year. Bought 2020 and been bidding my time when to sell. Between 20-30k loss. Had NLY as well, another pos stock that did nothing in years.

purumi

Sold a GOOGL put today, IVR acceptable and great company - January expiration, keeping delta under 20.

Krammsy

I interpreted you as meaning the Greeks, which "look" complicated, but only require grade-school math. Your last sentence is pretty much what I'm saying, new option traders, and new traders in general, tend to resort to staring at charts or trying to look back and backtest "similar" conditions on charts, when all it takes is knowing what to expect right now, i'e' IVR, Theta, Vega & earnings cycle.

MasterSexyBunnyLord

I already know about all these things. IVR and IVP are very useful but in the scenario where it moves against you there isn't much left you can do realistically but wait. OP was also talking about buying options but selling a put specifically

Krammsy

Of course it is, that's not at all what I'm saying. When you buy an option, you only have Bid/Ask to go by, if you don't have a reference to HIV over the last year, you're absolutely clueless as to whether it's relatively expensive or cheap. In response to your original statement "You can't know ahead of time", you actually can to a degree, I suggest Googling "Vega", "IV" & "IVR" for more detail. .

Krammsy

You can look at one year HIV, or IVR, check earnings date and come pretty close.

SwagOD_FPS

Just sell credit spreads on relatively high IVR stocks that aren’t overvalued and chill.

TheLoneWolf_218

The VIX is only at 20 and option IVR is at average or below average levels

LittleBoy1954

"build a strategy: Yes. I have a strategy in my trading plan that works. I tweak it every so often but not by much. "and blindly follow it without any additional support or indicator." That's right no technical analysis indicators. MA, MACD, RSI, Bollinger Bands, Keltner Channels, Gann, etc. However I do use a lot of fundamental analysis. I do that starting at 8:30AM (ET) by: Reviewing Asian markets activity (they're closed) Reviewing European market activity (they're mid day) Reviewing morning Economic Indicators (ADP, CPI, etc.) Reviewing AM earnings releases Fed upcoming activity Morning political activity and, especially, Morning futures market activity (e.s ES, YM, NQ, DX, GC, CL etc., ...and a few more things. By 9:30AM (ET) I'm ready to begin trading SPX 0DTE options. I generally let the market open for a 10-15 minutes and let it settle down. Then I look at Expected Move, IV, IVR and IV% and jump in with a Call and Put credit spread. Looks like a lopsided iron condor but in fact I trade the spreads separately. Some days the spreads are 1SD away from the money other days closer to 2SD. That's it.

LittleBoy1954

My trading plan takes into account Delta Δ. And a host of other factors (e.g. DTE, Probabilities, IV (IVR and IV%), etc. I have found that I have never been able to get the market to "behave" like I want it to. The market always seems to have a mind of its own. I have found that my trades only use Delta Δ and Probabilities in order to minimize (but not eliminate) risk. My druthers would be to trade positions that only "behaves how you want" i.e. always expire OTM but it seems like that's hard to do.

rrufino

TastyTrade has access to IVR (implied volatility rank). Which gives you the relative rank of IV for the past year.

AppleTree98

Wonder if we are going to see a consolidation in the various Generative AI models. I am a big fan of Gemini (Google). My work uses Copilot (Microsoft) and there are others like Anthropic. When I look at what leading edge major vendors are using like IVR tech they have dipped into multiple models to fit the need for a particular tech or region that is better suited for one of the other. Even Copilot is a blend...Microsoft Copilot is not based on a single model; it is a **multi-model, integrated ecosystem** that uses a combination of leading Large Language Models (LLMs) and Microsoft's own proprietary technologies.

EmpathyFabrication

Idk you tell us. Why is it down? Weeklies aren't giving you much extrinsic value as a writer and then you also aren't giving yourself much time to profit off IV either. IV looks pretty high what's IVR look like? You want to have your shares called away?

bobbyrayangel

Just sell vol on underlinings with an IVR above 30

Krammsy

Thank you again, the first one looks fantastic, I use IVR to gauge date-width's for calendarized spreads, that particular tool completely simplifies the task.

LittleBoy1954

I don't think there is a column that displays IVR or IV% on the options chain. However there are scripts available to plot both of those numbers on a chart. E.g. see: [https://usethinkscript.com/threads/implied-volatility-iv-rank-percentile-for-thinkorswim.674/](https://usethinkscript.com/threads/implied-volatility-iv-rank-percentile-for-thinkorswim.674/) Also on the Statistics tab. See: [https://www.schwab.com/learn/story/viewing-options-volatility-through-different-lenses](https://www.schwab.com/learn/story/viewing-options-volatility-through-different-lenses)

TradeVue

For active premium and directional trades, I define everything upfront. entry logic, management, and exit. Each trade starts from a framework of probabilities and expected outcomes rather than a chart or just bias. I typically sized based on return on risk and overall portfolio exposure and delta aggregate and some others. My size is usually about the same. making sure each position aligns with my defined risk tolerance and capital allocation framework before entering. Depending on the strategy I typically manage early and exit around 50% max profit for multiple reasons. So yes, for my full time active trading (seperate from investing or even LEAPS/CC’s/CSP’s) every trade for me fits a criteria, and if it does not, I am conscious of that like taking a lotto. it’s Entry criteria (R-multiple, IVR, EV ), probabilities (POP, expected move etc), IV term structure (if applies) management triggers, exit condition and some more. For me that’s what separated a repeatable system from guessing. if the plan changes, it’s because volatility or an external event shifts the underlying probabilities, not because of emotion or price hit a certain level. Having that framework means I don’t think about the P/L day to day, I just execute the mechanics. That point was really important for me.

Abdulahkabeer

Nice work. I run buy-side swings too 45–70 DTE, and I cap hold to \~2–3 weeks. Two things my reviews keep confirming: * Works best when IV is flat→down and I’m in by day 2–3 of the move. * If theta ramps or IV won’t compress, I switch to a debit spread instead of holding. Tagging DTE/IVR/days-held in my reviews made buy-side feel a lot less “coin-flippy.” What’s your IV/hold rule?

Krammsy

He's referencing the % current IV is relative to the average over the last year, also referred to as IV rank/IVR.

TradeVue

Premiums come from volatility, not just the stock itself. When implied volatility is high, option prices expand since the market’s expecting bigger moves. If you’re selling options, you want high IV relative to its history. that’s what IV Rank (IVR) is. It measures how current implied volatility compares to its past year’s range. High IVR = richer premiums and more mean reversion edge Stocks like NVDA, TSLA, AMD, SPY, IWM, and SMH usually have enough IV and liquidity to make it worthwhile. Scanners like Option Alpha and options samurai or Tasty’s platform can sort by IVR so you’re not guessing which names are overpriced on volatility. You are asking the right questions this is very important statistically to give you the best and most optimal outcome.

TheLoneWolf_218

IVR on the shorter dated options is down significantly. VIX measures 21 to 30+ days out

m23ward

I don't worry too much about delta neutrality, to be honest. I am in no way a highly experienced trader, so take what I say with a pinch of salt, but I just think delta neutral portfolios leave a lot of alpha sitting on the table and end up lowering returns overall. However, Tom Sosnoff et al have wayyyyy more training, researchers and experience than me, so you probably shouldn't listen to me lol. Pure volatility plays can absolutely work, but the market is very efficient and has a LOT of very smart, very well-paid people scooping up every cent of variance premium at latencies so low they are taking profit in the time it takes for the light from the charting screen to enter your eyes. Your setup sounds very sensible, as long you're diversifying your underlying with uncorrelated assets and not overexposing one market or asset class. My main analysis depends on the situation. If I am confident in a company's vision, fundamentals, and impact, then I use naked puts to wheel into the company. I usually go slightly ITM about 45dte, as long as the IVR is favorable to the trade. That way, I get paid to buy a stock I wanted anyway. If I'm shorting gamma, I need a solid thesis. I need a reason my thesis also has statistical edge either 1) over 2) in spite of or, 3) because of the big money. My main options plays though, are diagonals on LEAPS. Essentially the PMCC, but with a few twists. Really great convexity, slow-but-dependable theta harvesting on shorts to steadily reduce your cost basis. You can also switch it up to give you a great short position on a company with that same convexity and cost-reducing rolls. Beautiful trade.

Dry_Move_9569

The other side of that coin is that the TT "IVRank" is predicated on an arbitrary backward looking range of one year. Volitility doesnt necessary predicate a 1 year window. I do think that their IVR metric is a bit flawed, depending on your strategy.

ThetaHedge

Great write-up - a couple quick add-ons from the seller’s angle: * **Always check both present & historical premiums.** Sometimes IVP looks “cheap” but the actual % yield on puts/calls is still attractive. * **Vol isn’t uniform across expiries.** Like you pointed out with CSCO, 30DTE might look tame while 60DTE is screaming - matters a lot if you’re wheeling or selling further out. * **Practical takeaway:** for income strategies, IVP is usually more useful than IVR, but it’s best to look at both side-by-side with actual % returns to strike. Bottom line: IV isn’t just a number - you’ve got to match it to your trade, timeframe, and whether you’re buying or selling vol.

TradeVue

Totally hear you, i’ve been trading for seven years, using probability and statistics like IVR or expected move, etc., And 7 years ago not long after when I switched to that Is when I was able to replace my salary at my job because of the higher probability in advantages of some of these strategies. I haven’t met one but to the people who trade full time by just buying calls my hat is off to you, because that’s very hard to be profitable with. but spreads don’t require a big move if you use them for the right job. Debit verticals are for momentum, you buy a small width and let delta do the work, you only need the stock to lean your way and you take 25 to 50 percent and recycle. Credit verticals are for chop or mean reversion, short strike near 0.30 to 0.40 delta, you win with small favorable moves, with time decay, and often even if price drifts a bit against you. With selling premium you can be wrong on direction and still make money. Like when your 4DTE call loses value even though the stock was up- the guy who sold that contract is collecting credit. The Key is liquidity and structure, stick to tight bid ask names, keep widths sensible, manage early stc. Most professional options traders are selling premium because theta and modest IV contraction help them, and the flexibility some of these strategies can give you. that is why in my personal opinion defined risk spreads are a better intraday tool than naked calls or puts for consistency. But this is just purely my opinion as a random trader on Reddit, people obviously make money buying options, in my opinion it’s just harder. ***TIP- The delta of the option your buying is “roughly” the POP (probability of profit) of your trade. So if you buy a 0.43 delta call, your call has a “roughly” 40-46% chance of making 1 penny or more on your trade***

ORATS_Matt

Good call on the IVR. In our backtesting the rule of thumb is the market doesn't get the vol low enough or high enough at the wings, which is counter intuitive.

sharpetwo

Good points on IVR being noisy because indeed one outlier and the rank is warped for a year. That is definitely a trap new traders fall into. But IVP is not a magic fix either. It is still just a rear-view mirror: “where have we been in the past 12 months?” It tells you nothing about the forward surface you are actually trading. The windshield is term structure, skew, and RV vs IV. That is where the real edge sits. Sticking to your CSCO example: 30 day IVP at 47% looks “mid,” but if you are trading 60 day options you care about that line, not the 30 day anchor. Often the best VRP harvests are when IVP looks low, because realized is even lower and the carry is fat. We have a perfect examples in US indices lately with VIX (low) at 15/16 but realized at 8/10 and selling options has been perfect for 4 months now. So IVR misleads, IVP cleans it up a bit, but both are static. If you are putting on trades, you want to be looking forward, not just percentile marks of the past.

8805

Current IVR is 104. The crush is going to be epic.

Short-Situation-4137

Automatic strategies do not work when IVR is very high, meaning when price starts swinging like nuts for whatever reason.

TraitorJohnny

You've collected 17 in credit. Your upside breakeven is 357. The stock is at 350.44. You're currently at a -94% loss. Set a mental stop loss for yourself. -150%, -200%. Pull the plug if it gets hit. In the meantime, lean bearish (pray for a pullback). If it stays within your breakevens, roll at 21dte. With IVR at 6, time and theta decay on the straddle are your best friends. It's had a huge move up. After a big move like that, stocks tend to stay flat. But if that is not the case... If you're upside breakeven gets breached and your stop loss has not been hit, roll up the put to 357. Invert. Just information for your consideration. This is all easier done on a $20 underlying. Not something at $350. To learn strangles, strangle something cheap like UNG and let it get breached to play around with inversions or buying-the-guts-and-selling-the-wings. Good luck.

ZjY5MjFk

I had a $108 strike for Sep-05-2025. All day I wanted to close or roll it, but market was still 0.55 bid and thought that was strange since stock was around $100 most of the day and general market was depressed. IVR was lowish, in 20th rank. I watched that $108 strike and people were still buying it. I thought it was just the meme team being regarded again, but actually looks like smart money was being smart this time and got a good educated guess on it being added.

ZjY5MjFk

That is great list, I would also say be mindful of earnings. Some guys love earnings for increased IV, others think it's priced efficiency. My point is, don't just hop on a name because it has high IV, it could be a binary event. If it is, decide explicitly if you want to play earnings or not (it can be different than normal premium selling) Once you find a name I would say * Look at over all term structure (sometimes called vol surface). certain months are more rich than others. Just because a name has high IVR, doesn't mean all expiration are rich. * Once you find an expiration that meets your vol and DTE criteria, look at the vol skew for that specific expiration. This is a very broad stroke, but generally you want to be selling into skew. If puts are skewed (like SPY typically) then selling puts might make more sense. If calls are skewed (like in some meme stocks), then selling into that could be better. * Once you find the expiration and skew, look around the specific delta you want to trade. Look at expected move and probability distribution. It depends on how much risk/reward you want to take, but knowing where market is pricing the move is a good starting point so you have an idea where you want to be. * Most brokers have column for IV per strike. Look for anything abnormal is Strike IV, in volume/open interest and bid/ask spread. Not always, but sometimes strikes get beaten down or bid up, don't sell blindly. Be willing to fudge a little on strike choice if something really stands out as a better deal or to avoid an obvious bad one. * When entering the trade, if spread is only a couple pennies wide, it's ok to hit bid. But if it's 10 cents wide, then enter in trade a little above mid. Then tick it down, maybe a till it's a tiny bit under mid. If it's hard to get a fill, then maybe reconsider. On Fidelity and Schwab and IBKR in good liquidity names, you'll get filled around mid 9 out of 10 times. If you are having hard time getting a mid fill, then maybe it's a garbage name (or you have a garbage broker) and consider passing on the trade. Because the other side of the coin, is that if you need to roll, you'll be giving up something on both the closing and opening legs, so that at point you crossed spread 3 times on a suffering position. Not a big issue on big credits, but will create some drag on those lower credit trades.

microfutures

You can use delta to determine the probability of the contract expiring in the money. For example, selling a 30 delta contract is a really low probability of the contract working out for your counterparty. There is a more professional, calculated metric calculated by platforms, but delta is the shortcut. IVR and IV also help. Sell an underlining in a high IV, better PNL as IV decreases overtime and profit from theta decay at the same time.

sharpetwo

To his point, all these methods are not super accurate. They work but ... they have some disadvantages one cannot ignore. I personally use some mixes of HAR and a few other ML models to predict RV. IVR is def backward looking and in and of itself... it's not super useful. But it looks like you know your stuff :) Curious why you were asking these questions at the first place :)

ZjY5MjFk

ok, I just didn't understand your point. You say that IVR is a backwards looking metric, but then say you want to look at VPR. But current VPR isn't known, only historical VPR. There are things like GARCH which is a forward projection, but it's a projection and obviously not prefect. But I think we agree. Ideally, it's best to sell when you think IV is greater than what will be realized, but at the end of the day, it's just an educated guess at best (or randomly guessing at worse, like I do :)). If the real volatility was known before hand, then none of us could get paid. The market won't pay extra for a known fact.

ZjY5MjFk

IVR just tells you where it is, retaliative to it's self over the last year. The theory, is that volatility in general is a) IV is mean reverting and b) IV has a upper and lower bound (you can only expand or compress it so far) -- So if you sell in high IV, near upper bound, then it's more likely that IV will collapse back to mean. If it collapses, you get paid for that. But if you sell in low IV , near lower bound, then it's more likely that IV will expand back to mean.. If it increases your position is harmed by that. Timing is important though, nothing says that vol can't be compressed for a long period of time or that it will revert to mean on your "schedule". -- Another reason, is that you get paid more, in dollar premium, when IV is high than when it's low. Giving the same buying power, a higher IV product will give you more premium... or it increases the delta range. -- High IV could also indicate a market over reacting. During panics or manics, people rush into options, which can inflate their value in the short term. -- Nothing is set into stone though. The IV is information about market demands these options. But that information could be correct, maybe there is high IV because the market knows something you don't and that the price is justified. For example, around earnings IV is high, but there is also a justification for that, since a product can move quickly on a big earnings data point. -- Like sharpetwo said, what matters is if IV is higher than RV, but that is difficult to know, since we can't know the future. In general though, I think most options sellers would rather sell in high IV environments than low ones.

sharpetwo

IVR > 50 is just a rule of thumb not a law. It only tells you where today’s IV sits compared to the past year, not whether options are actually overpriced. But you want to sell things that are overpriced, and only those! The real edge is in the volatility risk premium: are options implying more movement than the stock tends to deliver? You could still sell get involved when IVR <30 if you saw that realized vol has collapsed even faster that implied. You have a perfect case in US indices right now: VIX 14 feels really low and if you look at IVR, there is no way you are touching it. Yet it's been printing for the last 3 months, because realized vol is not enough to challenge the implied you sold. IVR is like a rear-view mirror: it shows you where you have been, not where the next bend in the road is. It's good for context, but not a green light on its own. These "automatic" rules re fine for training and get exposure to volatility as an asset class. But if you want to trade with edge, you need to ask: is the market charging too much for insurance here, and am I comfortable being the one selling it?

microfutures

So did that magical ICT garbage, fractal, astrology for men, work out on your chart? lmaooo So you bought the 9/12 calls, gotcha. Let's see how IV reacts in the coming days, especially on tomorrow's market open, lol. Note to self: 19.9 IVR, IVx at 54.2% for the 9/12 call contract.

8805

In the past 2 weeks, nvda IVR has gone from 18 to 20, so that strategy has, in fact, not been the best way to trade earnings.

WorkingFriendship550

As of this morning my current portfolio is $564,391.28, and I am up $296,446.48 YTD. I was at my lowest on April 5th, when I was at around 80k. I was trying to do way too many different types of strategies and trying to get premium on underlyings I liked, using spreads or strangles or PMCC to generate the highest return. I stopped all of that on April 5th, and switched to almost solely (95%+) selling naked puts. I also stopped trying to put 30%,40%, or even 50% of my portfolio into whatever had the best premiums, and started striving to use less than 80% BP at all times, Ideally 70% or lower, whereas before I stupidly wanted to have over 90% utilized at all times. I started screening heavily and looking for extremely high IVR stocks that also had nice downside cushion to break even. For example selling puts that my breakeven might be 15, 20, even 30% at times below the current trade price. I'd then balance that with overall time premium %, and that's how I'd choose my trades. A HUGE help was achieving portfolio margin, as the margin calculation then takes into consideration portfolio risk for every trade, making trades that would cause me to be concentrated in a particular stock or sector undersirable due to how much margin they cost in buying power. Effectively allowing me to get better returns with lower risk while using less margin. So yes I'm up 100%+ YTD and 600%+ since I changed my strategy in April, but I'm not foolish enough to think that'll continue for any extended period of time. I've averaged roughly 12%/week since then. I have, however been able to weather some pretty strong wrong trades ( I sold 30k+ of RUN on the worst possible day, the morning that later in the day was announced that solar tax subsidies were going away) I currently earn \~368k/yr from my job, and so I'd like to get closer to 2m before completely leaving, where even 0.5%/week selling options would outearn my current income. Here's a [link ](https://imgur.com/a/5vlnE2e)to a screenshot I took of my highest earners YTD, and my current YTD chart. At the beginning of the year I moved all trading to tastytrade.

Krammsy

One month spread for opening @ low IV, one week spread on further dated (30+ DTE) for opening @ l high IV. Numerous sites offer IVR now, Market Chameleon for one.

MaxCapacity

I assume you mean IV Percentile when you say 52 week position.   IVP is less susceptible to skew during short term spikes in volatility, since it's a percentage of time below below the current IV.    IVR comapres current IV to the 52 week high and low range.  If there's a giant spike, the range expands greatly, and even high relatively high IV following that event will look low until the spike rolls off the 52 week chart.

Oszillationswerkzeug

To your last point, couldn't one mitigate that risk by selling puts on multiple different stocks with high IVR?

gtani

look around /r/thetagang and Tasty's YT for advice on scanning IVR's/percentiles to handle low Vix and volatile vix scenarios, diversify SPY vs indiv stock/ETF's and undefined vs defined risk as core/2ndary holdings, delta diffs, etc. And Julia Spina's book, you shd be able to get it free from Tasty, just ask.

monkies77

That's true, but if IV goes up on my bull put spread that goes against me, then the delta is going to flatten out. If I look at TSLA right now, IVR is 7%, IV percentile is 6% so it's on the mat. In this case if you were bearish, would you buy an outright put (and hope vega also goes in your favor), or a bear call spread (which if it goes in your favor the increased IV would lower your profits after the move too)? It seems most don't prefer to do debit option trades even in this scenario. The calendar would theoretically work but this post was interesting in showing that using those when there wasn't a catalyst such as earnings didn't work.... [https://optionstrat.com/build/bear-call-spread/TSLA/-.TSLA250919C310,.TSLA250919C330](https://optionstrat.com/build/bear-call-spread/TSLA/-.TSLA250919C310,.TSLA250919C330)

nivek_123k

i use IV Ranking, then I also check the ATM straddle price; looking for >10% of the underlyings share price. ex. INTC is currently trading \~$19.33. the ATM straddle is trading $1.87 (pre-market, just an example). So premium is less than 10% of the share price, indicating the IV is low. I confirm this by looking at the IVR currently at 7.6. All this to indicate that short premium is less attractive. this isn't to say you can't/shouldn't trade short premium on a low IV underlying, just that there is less juice in the fruit. the IV and premium should indicate mechanics instead of bias.

Inquireaboutmyblog

Do you avoid/target earnings releases for the CSP's? IV/IVR has no factor into your picks? CVX options seem to have very low premium the majority of the time. Do you have ideal DTE's and delta targets for these type of underlyings?

notquitenuts

Yes they provide the data, they advertised on “option block podcast” when I used to listen to them several years ago. When I sell strangles I ONLY will sell them if the product is liquid, and the IVR is above 30. I’m fairly close to tasty trade mechanics although I do sell a fair bit shorter dte strangles than they do.

notquitenuts

For the earnings this week it probably would have worked because the IVR was quite low. Maybe 18 or 19 iirc. You would have had to sell the put near the lows though (302ish?) because at the close on Friday they were pretty close to the Monday close so you would have lost most of your debit. Just doing this from memory but that’s my recollection. I’m mostly a strangle seller and barely touched them because the IVR was so low there wasn’t a lot of premium for sellers. There is a company that tracks each earnings cycle and how many companies exceed the expected move and each companies track record of exceeding or staying within the expected move. Can’t remember their name though.

WebbyUp

Research shows your highest probability when selling options are: Liquid assets only IVR = 30+ or IVP = 45+ Sell around 45 DTE Roll or close at about 21 DTE Profit target = 50% credit received Max loss = 2x credit received Still must be directionally correct You won’t be assigned with this strategy, it has the most efficient Vol decay over time and it avoids the most volatile period for options (21-0 DTE).

Iam-WinstonSmith

This is the worst advice I have seen yet. You should buy options that have low IVR and a good technical setup. You sell options that have High IVR and a good technical setup. It has little to do with finding good companies, finding companies that have good liquidity is way more important. Trading is speculation and should be done with some type of statistical strategy in mind. Gambling should be left to casinos.

ghlc_

I think that its a very radar on what is cheap and what isnt. Ifyoutubers are telling you that bonds is at an once in a lifetime opportunity that means stocks is at an once in a lifetime opprtunity hahahaha but you know, Vix and IVR do exactly the same job

TradeVue

this is all just my experience. you’re a lot further along than a lot of people I can tell you that. You don’t need to give up, I’ve seen a lot of people quit when they were closer to being profitable than they thought. The fact that you’re trading spreads and doing research and analysis on your system is great. not wrong to feel like this has started to feel like gambling. selling weekly verticals on AAPL with a 0.20 delta while picking direction based on how the week feels isn’t a repeatable strategy in my experience. Even though the win rate could seem high, the risk/reward is lopsided and one bad week can wipe out months of gains. To me That’s not edge, it’s luck. The. key to making this sustainable is shifting from prediction to process. trade based on probability. Instead of guessing direction, you want to build trades around mechanics like IVR, expected move, Sigma, POP etc. If you’re only trading one spread per week on one ticker, it’s too narrow for probability to play out. Even with defined risk, this isn’t scalable unless you have a framework and position size small enough to survive variance. You don’t need to stop trading, I would just say work on your approach with the criteria to look for using the right metrics. Get systematic, trade smaller, and spread your trades across time and tickers. Trade small, trade often, trade high probability.Then let the stats work in your favor.

TheLoneWolf_218

I track bullish to bearish post ratios as well as VIX levels and daily option IVR in SPX. Based on my findings we are at 96% bullishness and 74% retardation

matlockm

With IVR or are there more factors?

TradeVue

For context I’ve been a career equity options trader for6 years. I mean this with no hate toward technical analysis at all, I have a lot of questions that would help me better understand but have you ever tried trading using a mechanical and repeatable approach using statistical probability, expected move, IV rank, etc? Are you only buying options? Or are you taking advantage of selling premium and having time decay and IV on your side. Have you tried trading high probability spreads or other multi-leg strategies? Have you found technical analysis to be consistent and repeatable to the point where you can place multiple trades and feel confident and not need to monitor it constantly? what really changed the game for me was realizing I didn’t need to predict anything. I just needed to manage probabilities.Now I size small, trade often, sell premium in high IV environments, and use things like delta, expected move, and IVR to structure high probability trades. I know my POP going in, I manage winners early, and I let the law of large numbers do the work. I don’t know if you have considered non-directional strategies , because picking direction constantly is tough and I would rather not do that. A lot of people never get past buying calls and puts because it’s intuitive at first, but you start with multiple disadvantages and you need to be right directionally and you have to be right fast. Those disadvantages turn into advantages when you’re selling. I used to trade price action too, and I get the appeal of “seeing the chart,” but what really leveled up my consistency was ditching the idea that I needed to “see” anything and instead focusingon math and mechanics. I trade non-directionally now, mostly premium selling strategies like strangles, iron condors, and credit spreads, and I base my decisions on things like IV expansion, expected move ranges, POP, and theta decay not candles or key levels. I’m not saying one style is better than the other, but if you’re hitting a wall with self teaching and price action (which was me 6 years ago) it might be worth exploring the systematic side of trading. It removes a lot of the subjectivity and lets you focus on repeatable setups that don’t rely on timing or charts “feeling right.” I try and help people for free because it was given to me for free, if you have any questions let me know!

videosdk_live

Yeah, most people haven't actually talked to a real next-gen AI agent on the phone yet. The tech is getting close, though—stuff like OpenAI's Voice Engine and Google's LaMDA are making it possible to have natural, lag-free convos that feel almost human. But most companies are still stuck with the old-school IVR robots. Once these new agents go mainstream, it's going to be a game changer for call centers (and probably for our collective sanity).

Subject_Formal781

I'm not talking about IVR, I'm talking about AI voice agents that you talk with over the phone. The last time I talked with an AI agent? Never. You likely never have either. You're thinking about when you call and the robot voice asks you a question and you answer. I'm talking about next gen - you call and you don't even know you're talking with an AI agent. They answer your questions without lag, match your accent/language, have endless empathy, ask follow up questions, etc. Conversations in real time. It will blow your mind.

Histole

Do you look at IVR? IVP? How do you tell if IV is high? Thoughts on delta neutral strangles?

wampum

I like it a lot more than vanguard or robinhood for anything other than simple, sleepy, ETF buy-and-holding. The watchlist is nice and I like the price alarm notifications. For options, it’s a lot easier to track IVP/IVR and they have tools for exploring potential options trades that are very nice. The stock screener is also very powerful.

VannaSwan762

I sell options too. Some gamma scalping. Some vertical, calendar, spreads etc. I’m interested in trading futures with orderflow in combo with my current non directional strategy. Any advice? I’m profitable at selling derivatives but i want to expand. My techniques are similar to yours. I agree about IVP and IVR but I think sentiment models also offer helpful insight as leading indicators.

TraitorJohnny

Earning plays can be tricky and I would not recommend them for beginners. Paper trade at first to learn. >What time frame is the best before earnings? Open the trade right before the earnings announcement. If the earnings is after market, open the trade the day of. If the earnings is pre-market, open the day before. > How do you know a call/put is overvalued? Look for high IVR or high IV percentile, if your platform supports it. Look at the relationship of implied volatility minus realized/historical volatility. If positive, options are overpriced. This is only a rule-of-thumb/heuristic. > What are the best strategies? Butterflies at the expected move. You'll have to pick a side, either calls or puts. Calendars/Diagonals. Sell the nearest dated option. To cover and not be naked, buy a further out in time (30+ days) option to cap upside risk. Nearest dated options will experience the most vol crush. Further dated options will have less sensitiviy to volatility.

Nima_from_graVIXor

You ve got 1/3 of ur max loss already. I would take advantage of high IVR and spread the position off, selling a leg for the earnings cycle. May be reducing my overall max Loss to half if the position tanks, and giving myself a decent chance of breaking even/ modest profit otherwise

Krammsy

Depends on the sector, VIX I always do OTM because they're cheaper, theta is lower and the VIX moves fast when it jumps. OTM options have more leverage, less Theta, but more likely to expire worthless. Regular equities often ITM, mind Theta is higher ITM, so I'll bump the ratio to 20%, more if IVR isn't bottomed, only for the fact that the underlying may not be volatile and if it expires ITM it's a bonus. For commodities like gold or gas, I'll use a leveraged ETF calculated by it's multiplier to a regular option's delta, such as a UNG put against BOIL.

TheInkDon1

I took a look at the chart and wasn't impressed with the 5y or the 1y, but what's pushing it up these last few days? I don't know much about Snapchat the company, and less about the app, but there's maybe a case to be made that it was an $80 stock 4y ago, so maybe it can get there again? Looking at the option chains, IV is pretty high, but not too crazy. I didn't look at IVR. The 352DTE 5C might be at about 80-delta, the AH numbers are kind of wonky. 4.70 Mid to buy that gives you nearly 2:1 leverage to shares. Coming in to 108DTE (3 months is as close as I buy Calls), the 17Oct7C for 2.78 does look sexy. Leverage: (9.35 / 2.78) x 0.86 (the delta) = 2.9 times So if SNAP goes up 0.66 like it did today, that Call goes up 1.90. And 1.91 divided by the purchase price is a 68% gain. If I bought that, I'd sell the 31DTE 26-delta 1Aug11.5C against it for 0.32. ROI is: 0.32 / 2.78 = 11.5% in a month. 135% apy. Very nice.

TradeVue

props to you for seeking information, stay curious. most people start by buying calls and puts and get frustrate their win rate isn’t there. Ive been there. the odds are just stacked against you when you’re long delta… you’re fighting time decay and implied volatility, so even when you’re “right,” the option doesn’t always pay. you can definitely make money buying, but when you’re selling, IV and theta start working for you instead of against you. so I found the best strategies for myself and my career through almost always collecting credit what worked best for me when I started moving toward full time was switching to structured strategies like credit spreads, short puts, and iron condors. they let you trade with a built in edge. instead of needing the stock to move big, you profit from it staying inside a range or even doing nothing. I’m sure you’ve had a call lose money even though the stock went up… the person who sold that option was “wrong” on direction and still got paid what works best for me now?: – iron condors and short strangles when IV was high and I wanted to stay neutral – high probability short puts on stocks I wouldn’t mind owning – ratio spreads for setups with a directional lean but extra room to be wrong – credit spreads for directional trades with defined risk and all of these are found and executed through metrics and stats like sigma, IVR, delta, expected move, etc. learning to trade without charts changed a lot for me, that’s just me personally I have nothing against TA at all. but yeah, I eventually found my groove through that. im nothing special, you can absolutely do it!

God_of_Theta

Undefined. I have general rules I follow though. I 100% of the time have positive theta. I open my spreads based on momentum, DCA more spreads until market moves other direction. I open spreads on the other side, all 1-3DTE. I leg into iron condors, calendar spreads, and butterfly positions. Which stradegy I leg into depends on my current delta/theta/gamma I look for the highest IV strikes and give them preference. I don’t follow the news (very closely), I follow IV and IVR. I.e VIX. and rely on the Greeks for every trade. Here is what my [trades on spy](https://optionstrat.com/lkyPpuYMZYIW) look like for Monday.

TradeVue

Nice work man, seriously. Love seeing people trading like this. Systematic premium selling with actual structure is where the real edge is and with that alone you’re already ahead of most people. That RDDT situation is textbook. capped upside pain is real but it’s also the cost of consistency. You traded mechanics and collected your rent, that’s the job. Covered calls and strangles on growth names like that are always going to be a balance between keeping your shares and harvesting income. Some people hate getting assigned, but I’d rather have steady premium than gamble on a moonshot. The upside always looks better in hindsight but you protected yourself and took high-probability profits. Also agree on stock selection mattering more than strike “perfection.” I generally try and sell outside the expected move but am always flexible. If the underlying has good IVR, theta will work itself out over time. You could chase 1-2% better deltas all day and still get run over by a bad earnings or news candle. Only thing I’d throw in, if you’re not already doing it may be worth it to consider scaling into your short strikes or managing early if you’ve got 50%+ of max profit with lots of time left. The philosophy I follow is trade small and trade often. Trade small to give yourself the ability to stretch your buying power through time enough to trade often, and if you trade often in a high probability setup, the law of large numbers will work in your favor. All about putting as many occurrences as you can in a high probability framework. Anyway keep posting these, this is the kind of content that really helps new traders. It’s refreshing to see, I rarely see much about any advanced or multi-leg strategies on here but then again I’ve only been here for 2 weeks. Anyways, cheers!

TradeVue

Yeah this is a solid idea and you’re thinking about it the right way. Selling 20 delta puts on oversold names gives you a decent buffer and high POP especially if you’re comfortable taking assignment on quality stocks that may or may not be at a good discount. BUT 8 DTE is pretty short so you’re going to get fast theta decay but also very little time for a bounce if the stock keeps bleeding a bit. I’d personally look at something like 21 to 30 DTE, (really 45 DTE and manage at 21 is what I follow), Just to let the trade breathe and have more time value if you need to roll. Also gives you more premium for the same strike. Try managing winners at 50% max profit to boost consistency and reduce risk. Trade small, trade often, trade high probability. And consider rolling positions around 21 DTE if they move against you but are still out of the money. Also, check IV rank before entering (if you don’t already) when the IVR is over 30 you’re getting paid properly. Keep your position size small to avoid getting overexposed if multiple puts go in the money. And stay mechanical don’t fall in love with the names, just follow your delta, RSI, IVR rules and let the system play out. That’s how you keep premium selling consistent and scalable over time. Also, you’re working with 50K so just make sure you’re not selling puts that would force you to take on too much exposure if more than one gets assigned. Like BRK and TMO are capital heavy names so maybe pair one of those with lower priced tickers too. Your logic is solid, you got it.

aka_rob

https://youtu.be/7pSw_qqyEXk?si=kSI09IVwlMgsqAbF I like this guy’s take on things. He also has an options crash course playlist on the tastylive page that’s worth going through. https://www.tastylive.com/concepts-strategies/vertical-spread is from the tastylive webpage as well. I will say that if you ignore some of their advice, it can go south quickly. Biggest one is paying attention to your short leg delta and the IVR of your underlying.

PapaCharlie9

"Good" might be a bit optimistic, but it's an indicator and something is better than nothing. Even a broken clock is right twice a day. IVP is only as good as the likelhood that the past is predictive of the future. A lot of times it is, except for the times it isn't, and the times it isn't tend to fall into the fat tail that spells disaster for your trades. All that said, I think it's fine to use IVP and IVR to screen for trading opportunities. It's not a guarantee of profit in any way, but the IV of stock XYZ that has an IVP above 60% is a lot more likely to decline than an IVP below 40%. You're playing the odds and using historical IV to gamble on reversion to the mean.

optionsHODL

I am surprised by how little comments there are for this post. It really is fantastic. Something else to consider that you didn't mention is that keeping BP Usage lower during a low VIX environment. I know VIX isn't always correlated with GLD, but during times of market stress/panic it becomes more correlated. So if we are VIX gating our BP, then this trade makes a ton of sense. We spend more time selling ATM puts with a longer DTE, and then if assigned use the shorter DTE to wheel them off ATM. Trying to keep the majority of our time in the contract on the put side. If VIX elevates due to market stress GLD prices usually increase and we can exit the position and move into higher IVR assets or just farm the rise rolling the puts down(up in price) as GLD increases.

PapaCharlie9

I'm confused about what you are trying to do. Low IVR conventionally is considered to be **good** for buyers, since it's saying that current IV is low in the range of IV for the trailing year, and since IV is mean reverting, the expectation is that it will rise, which is good for buyers. Since tastytrade usually promotes *credit* strategies, which means sellers, not buyers, you may be misapplying a "Tastytrade" recommendation intended for sellers to a BTO you want to do? You did say "recommendation of **buying** 1/2 the width...", so I assume you are talking about a BTO trade?

whoispankaj80

let’s first fix that stupid IVR machines in customer care. that hasn’t happened in ages

matlockm

I wanted to sell credit spreads but all the major liquid tickers have low <30% IVR. Based on the IVR and Tastytrade's recommendation of buying 1/2 width of the strikes turns into too much of a risk for me at \~50% POP. Based on this I'd rather wait till I can sell to open so that I can trade 1/3 width of the strikes to increase my POP to around 70%. Is my reasoning logical here to sit out the market until things become more high premium options trades?

royofhollywood

IVR matters too. When IVR is high, you may be able to get enough premium selling a 16 delta call, but if Vol is low, I look at 16 deltas and if I am getting like $20 for the call, why bother? I usually do a wheel on my margins. So if I have 500 shares, i will sell one 25 or 30 delta call and if gets called away, I then sell a Put at that price, which will be like 40 delta and if i dont get put the stock, Ill roll up and keep that put at 40 delta collecting premium until I get put the stock.

TradeVue

Yeah so I just keep a watchlist of liquid underlyings with tight bid/ask and plenty of options volume. From there to start, I’m mainly looking at IV rank. If IVR is high, that’s when I lean into iron condors since I can collect more premium and still set my strikes wide. I’ll usually go around 45 days out, set my short strikes just outside the expected move, and make sure I’m collecting a credit that’s at least one-third the width of the wings. That gives me good risk/reward and room to manage if the trade moves against me I don’t hold them to expiration unless I have to. Too much gamma risk close to expiry, and I’d rather free up buying power and cycle into a new setup. The goal’s really just stacking high-probability trades over and over staying mechanical. Also a big fan of taking profits early a lot timesaround 50%. Like I’ve said trade small, trade often, and locking in wins when they come, taking profits early helps overall probability of staying profitable over time because it you have less exposure to random moves late in the cycle and allows you to keep deploying capital.

TradeVue

This is a great visual, and it nails the core trade off in options, win rate vs risk/reward. most new traders don’t realize is you can’t have it all, you either win small often (like with short puts or iron condors), or you try and go big with stuff like long calls and debit spreads that win less often but pay big. That upper right quadrant, high win rate lower reward, is where most probability based traders live. Selling premium like far OTM condors or cash secured puts works because it lets you trade small, trade often, and let the law of large numbers do the work over time. TS style. keep the probability edge and let time do its thing. Not sexy, but effective. Bottom left unfortunately is where everyone seems to start in a lot of people never get past it, since the disadvantages of buying catches up to them, and they may not know another way. knowing what type of pain you can tolerate is important. Find a strategy that’s high probability use POP and P50, IVR etc. learn how to have time decay and IV crush on your side. Be the casino not the player

Psycha_Naut

This is a great visual, and it nails the core trade off in options, win rate vs risk/reward. most new traders don’t realize is you can’t have it all, you either win small often (like with short puts or iron condors), or you try and go big with stuff like long calls and debit spreads that win less often but pay big. That upper right quadrant, high win rate lower reward, is where most probability based traders live. Selling premium like far OTM condors or cash secured puts works because it lets you trade small, trade often, and let the law of large numbers do the work over time. TS style. keep the probability edge and let time do its thing. Not sexy, but effective. Bottom left unfortunately is where everyone seems to start in a lot of people never get past it, since the disadvantages of buying catches up to them, and they may not know another way. knowing what type of pain you can tolerate is important. Find a strategy that’s high probability use POP and P50, IVR etc. learn how to have time decay and IV crush on your side. Be the casino not the player

notquitenuts

I’ve traded a ton of diagonals and calendars and got into them because on paper it looks so good. The reality is that it’s way harder than it looks to make any money. While it may seem that your just banking theta, imho Vega and gamma really are the heavy hitters in these trades. I only trade them now as a vol play where I am expecting a reversion to the norm for vol. I use IVR on tasty for this. I just put on a diagonal in BA the other day. IVR was down to 6 so I sold the jun 215 and bought the July 210 expecting the IVR to creep back up to at least 20 or so in the coming weeks. These are very slow moving trades

OptionsJive

A stock can stay undervalued longer than you think. I'd choose put ratio spreads to capitalize on Google's high IVR.

microfutures

Start out with the how to trade options tutorial first and then search for other youtube videos on things clarifying specific topics where the big video tutorial couldn't explain it. Like, InTheMoney's tutorial. Great guide, but there are some things I couldn't follow along with so I had to look for other videos explaining certain things like implied volatility and the greeks. Tastylive has great video tutorials as well, but your post says you want to learn as a buyer and not as an options writer or have a strategy with multiple legs so I won't further into it as tasty's mechanisms are mostly writing options. I'm mostly a writer for options contracts, but I do get in some directional plays. 1.Research? I look at the IVR (compares the implied volatility over the past year to the current IV) and look for stocks with a low IV (not above 30, but somewhere between 10-25. Why? Options prices are low. This also opens up the opportunity that if the IV goes up, while I have the contract, the value of my contract can go up as well. Next I look for stocks with decent volume and tight spreads. Why? It's hard to get in the trade, but can be VERY hard to get out. Also susceptible to wild swings in the PNL. I can be up 20% on the stock, but then I can be down 40% the next minute. I've had it happen where I was up 60% on the trade, I want to close the call open, but I don't the the fill because of the spread being so wide and have to wait for a willing buyer to buy this contract from me(if ever). 2. Why a call or put? You need a bias, or reasons, as to why you think the price is going to go up or down. Look at a chart and take a guess as to what direction price will go before the contract expires. If the price is trending down, expect puts to cost more and calls to be cheaper. Is price trending down and you think that bottom is in? Calls are cheap. 3. Choosing strike price? Depends on risk tolerance and if I want to be in the money, at the money, or out the money. If I buy in the money contracts, it's much easier to breakeven on the trade than it is to buy out of the money contracts. Although, they cost more and there's the risk of the price going down where I lose the intrinsic value from the contract. 4. Expiration? I'll buy contracts that are 60 days out. Theta decay is the silent killer for option buyers. Around the 30 day mark is when theta decay starts to kick in. However, this is where paying attention to the greeks is really important, especially for delta and theta.