Implied volatility overstatement

IMPLIED VOLATILITY OVERSTATEMENT

What is it and how do we trade it?

Let’s examine my real $ trade alerts from Friday.

If you look at historical data, implied volatility (IV) tends to overstate actual realized volatility.

Studies have found IV was overstated 75-80% of the time.

The reason being that the fear of uncertainty is overblown.

The higher the IV of an option, the higher the options premium, and therefore a bigger expected price change in the underlying stock.

When I believe the market is overestimating the potential for a significant move I sell option spreads.

For example, Thursday I sensed the market was fatigued, so I sold an options spread on NFLX that would make money if NFLX traded sideways or lower.

As markets fell Friday I made $1,200 or 29% on the NFLX trade near the open.

When the selloff in the Nasdaq escalated Friday most stocks headed lower.

But I noticed TSLA, COIN, and CVNA were green. But their options premium was swollen i.e. great for the seller.

So I started selling options spreads on TSLA, COIN, and CVNA that would make money if those stocks traded slightly lower, sideways, or higher.

This resulted in a realized profit Friday of $3,050 on very small position sizes.

And some really nice % returns.

What most traders do not understand is the swollen options premium I was selling on those 6 trade alerts — it’s only time and IV.

So for the last trade, CVNA, the $1.80 entry I had is called premium and it’s made up of time and IV — nothing else.

Because TSLA, COIN, and CVNA traded against the market Friday, those premiums kept falling fast toward $0.

And I made money.

As the market was diving traders kept buying out-of-the-money put options on COIN.

But COIN was clearly strong — just look at that chart above.

The implied volatility overstatement on COIN created expensive options and those are great for sellers.

I just sat there all day selling out-of-the-money put spreads to options buyers who thought COIN would crash with the QQQ.

As COIN continued sideways and higher the buyers lost money and the sellers (me) made money.

I repeat this process over and over. And have a 88% win rate doing it.

And that’s how I’ve turned $2,000 into $44,756 in my service called the $2,000 Small Account Journey.

I want to point out that I cannot speak for my members’ performance, as results may not be typical and trading is HARD. And I cannot guarantee you will make money. But what I can guarantee is that I will work my BUTT OFF to teach you WHY I trade WHAT I trade.

It’s a pretty straightforward strategy that I find works really well.

I hope you enjoyed this lesson on implied volatility overstatement.

If you’d like to receive the $2,000 Small Account Journey blueprint and my trade alerts as I enter and exit positions — subscribe to the $2,000 Small Account Journey.

Or, for a limited time you can get it included in JASON BOND LIVE at a better price.

LIVE is where I trade small-cap momentum, $2K SAJ trades (seen above) and directional options — like my $510 QQQ puts bought and alerted Thursday.

Friday they closed in the $14’s overnight.

JASON BOND LIVE is a great deal right now because it’s 67% off and includes a 2nd year FREE — click here to learn more.

But if you only want to learn how I trade a small balance, do the $2,000 Small Account Journey — it’s a great place to start.

Sincerely,

Jason Bond

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