Confusion on action taken after correct market movement based on IV

[Nitin Bhatia]

Sir,

I am bit confused or not able to digest correctly as a learner.

As per your education on IV in below video,
https://youtu.be/s_bt6b9GacQIV Trading strategy

What Proffesional Traders do is,

1)if IV is high >> sell put and never buy call
2)if IV is low >> buy call and never sell put

Which is contradictory.

[Nitin Bhatia]

Hi Hiren,
As per my understanding from the same video,-
Scenario-A
If Pros want to go LONG in the mkt-
1.They Sell PUT & don’t buy CALL if “IV is HIGH”
2. They Buy CALL & don’t Sell PUT if “IV is LOW”
in both of the above positions they are BULLISH in the mkt.

Scenario B
If pros want to go SHORT
1) They Buy PUT & don’t Sale CALL, if “IV is HIGH”
2) The Sale Call & don’t buy PUT, if IV is LOW”
in both of the above position they are BEARISH in the mkt.

Hope I am able to clarify this,if it is a wrong interpretation by me The OCEAN of Knowledge-Nitin Sir to kindly correct.

[Nitin Bhatia]

Guys one more thing i want to add that ::
high IV leads to increase premium which indicates that seller is in fear in order not to hit his Strike Price he increase his premium ( coz normally retail investors usually prefer to buy call or put option with lower premium)
If market moves against the seller then seller usually unwind their contracts to prevent further loss which can leads to short covering ( IV shedding )

Hope this concept might b helpful if any addition you are welcome. Thankx to NB sir for creating this club….

[Author]

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