Home > Articles > Volume 38 (2020) > Chapter 5 (May 2020) > Stocks & Commodities V. 38:05 (60–61): Explore Your Options by Jay Kaeppel

Stocks & Commodities V. 38:05 (60–61): Explore Your Options by Jay Kaeppel

Stocks & Commodities V. 38:05 (60–61): Explore Your Options by Jay Kaeppel
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Explore Your Options by Jay Kaeppel

MITIGATING VOLATILITY RISK WITH OPTIONS

I typically just buy calls and puts—that is, long premium. The stock market fell hard and I think it will bounce, but implied option volatility has gone through the roof. Is it a good idea to buy calls in this situation? Or are there alternatives?

There are a few key considerations to account for in this situation. First, take a close look at Figure 1, which displays price action for ticker SPY along with the implied volatility for 7- to 30-day options ...




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