Relationships in the Market

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There is divergence in the force… the market that is. Looking at the 3 major indexes – the SPX, RUT, and QQQ – the weakest index has become the strongest and the strongest the weakest. One thing that we have been harping on is historical volatility vs. implied volatility. Everybody wants to be premium sellers including us at TheoTrade. However, we have a shift in dynamics that traders need to be aware of or they will be run over by the market. When historical volatility exceeds implied volatility the juice isn’t worth the squeeze. This is a rare time in the market when you want to be long gamma (AKA an option buyer). TheoTraders buy options the smart way though through debit spreads. We recommend In Out Spreads in today’s market. Let’s dive in…

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