Dear community!
I would like to get an opinion about the following video. I posted the link below.
After making some research, I made the following assumptions and conclusions.
- Options are probability-based financial instruments. The premium paid for buying a straddle is supposed to include all risks related to the potential change of IV, theta, gamma.
- The chances of gain are 50/50 similarly to any short time predictions of the market price. Besides, you lose the spread and pay commissions.
- Options pricing already includes any potential increase in IV and time decay is more likely to kill the potential trade.
- As the markets are very efficient, Options pricing already includes information about historical volatility. Even if we find stocks with high historical volatility during previous earnings, the greeks are always balanced between each other to make your chances of win to 50/50 minus spreads & commissions.
So, what you think?
As options are