What is the volatility measurement you look for when buying calls?
Do you just look at the stock and determine how often in the market it swings? Do you do this with index stocks or with individual stocks?
Is this basically pattern studying and deciding if you are in a low or a high to do this?
Do you concentrate on earnings or just overall movement in the stock?
Comments
The only volatility measurement that matters is the volatility implied by the options market price.
You should start with some basic reading. Sheldon Natenberg’s book "Option Pricing and Volatility" is the very first book most option traders read. Start there.
August 9th, 2010 at 5:32 am
Feeling a little innundated are we?
Your "addition statements" don’t seem to coincide with your original question, but let me try to clarify.
You need an underlying instrument that swings enough to profit from the middle. The graveyards are full of bottom-pickers.
As a trader, you must develop a bias of market direction from some method, usually involving trend. Investors and scalpers are not required to have a bias.
Trend: herein lies the rub — over what time frame? Only you can determine your comfort zone for frequency of trading.
If you only use one method or measurement, you will be out of sync with the waves of price movement, and find yourself on the wrong end of the stick.