What To Consider When You Are Buying An Overpriced (High IV) Options

In the previous post, we discussed that when IV is relatively low (option is cheap) and is expected to rise, we should buy options (i.e. consider options strategies that allow us to be an option buyer).On the other hand, when IV is relatively high (option is expensive) and is expected to drop, we should sell options (i.e. consider options strategies that allow us to be an option seller).However, often we�d like buy options despite the relatively high IV (i.e. options is considered expensive).For example, for myself, I like playing directional swing trading to take advantage the expected price movement for 1 � 3 days. Hence, in this case, I�ll just buy straight call or put options depending on the expected direction. However, frequently the option is relatively high in IV (�expensive�). Is...

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Some Trading Wise Words

I found quite a number of good trading quotes from Trading & Motivational Quotes blog.I think this blog tries to compile the words of wisdom or trading principles from many sources or books.You can check it out on you own for the whole collections.Here are some of the quotes from that site that I really like and I hope it can be useful for my readers:Turtle Trading PrincipleTrade with an edge, manage risk, be consistent, and keep it simple.The entire Turtle training, and indeed the basis of all successful trading, can be summed up in these four core principles.Curtis Faith, Way Of TurtleWhy Chart Patterns Repeat ThemselvesAll through time, people have basically acted and re-acted the same way in the market as a result of: greed, fear, ignorance, and hope.That is why the numerical formations...

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Follow Your Trading System

Previously, we have discussed the important components of a trading system.When you have built or found a trading system that suits you, it is recommended that you test the trading system through paper / virtual trading before you trade it using real money.Once you�ve had a proven & tested, profitable trading system, you yourself & your discipline will be the key determinant whether the system will be a success and a failure. Successful traders are those who are psychologically prepared and have the discipline to stick with their system through good times and bad times. You can never reach your goal as a trader if you can�t maintain the...

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TWEEZER BOTTOM VS. TWEEZER TOP

Both Tweezer Bottom & Tweezer Top are reversal patterns.Whether a pattern is bearish or bullish reversal, it depends upon whether it appears at the end of a downtrend (Tweezer Bottom) or an uptrend (Tweezer Top).A Tweezer pattern forms when two or more candlesticks touch the same bottom / low price (for Tweezer Bottom) or the same top / high price (for Tweezer Top).In standard technical analysis, this pattern can be comparable to the Double Bottom or Double Top.The Tweezer can be composed of candlesticks with real bodies, shadows, and/or doji candlestick.They also may occur on consecutive or nearby trading sessions.When the Tweezer occurs...

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