Options Trading Tips

1. High VIX – Avoid trading options when VIX is greater than 25. VIX is the Implied Volatility of the SPX and a high VIX usually means high premiums on Options. Implied volatility is how much the market expects the value of an options contract to move. Therefore, higher the IV, more valuable the Options Contract. If price stabilizes and the large move is not materializing then IV can crush causing options price to crash and one can lose money even if you are directionally correct.