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Strategies & Market Trends : Option Spreads, Credit my Debit -- Ignore unavailable to you. Want to Upgrade?

To: Richard Nehrboss who wrote (983)	10/17/1999 4:23:00 PM
From: KFE	Read Replies (1) \| Respond to of 2317

Richard, Let's say implied volatility hits 40 early this week, and the bet is it will drop to 20's... How would you use options to play this? Basically, if IV is peaking sell options, if it is bottoming buy options. Some ways to profit from a drop in IV would be to sell strangles or straddles. If you can't, won't, or shouldn't do nakeds then OTM credit spreads can be done. Generally if the underlying drops IV goes up and if the underlying rallies the IV goes down. Is it as simple as selling a box and buying back when VIX drops When the term "box" referring to options spreads is used I take it to mean that a bull and bear spread using both calls and puts with the same strikes are used. I don't see how this arbitrage play could take advantage of change in IV unless you are legging into the short sides first to take advantage of the high premiums. Regards, Ken