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Things that are to be done in options trading strategy during low volatility

During recent times, DJI (Dow Jones Industry) has been traded with the average that starts from lower of 6500 to the higher of up to 14,000 points. Currently, Dow Jones industry also had its low volatility days as well as months and it swings up to 400 points during the volatility period. Even VIX (volatility index) also seen some wide range during these days. Option price gets affected from the volatility period and it will help some of the option trading strategies to work better than the other concepts. Trader should select a best option that is based on the volatility index. You can get some good tips on how to do best in option trading strategies from this source.
You need to know one concept in the options trading strategy that the Dow Jones industry leverage trend will get increased if the volatility index trend decreases. The vice versa is applicable as well. You can have a clear look in the VIX (volatility index) chart that it was at a higher range during the early 1970’s as well as recently during the year by 2008 and 2009. Dow Jones Industry leverage trend was certainly ranging from 6500 to 8000 points and it means that DJI was low at those periods. As per today’s record, volatility index chart is trending lower and remains at an average of 25.

Posted in: trading strategy

This entry was posted on Monday, April 12th, 2010 at 12:14 pm and is filed under trading strategy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.