How To Deal With IV Spikes
United Health implied volatility spiked
A chain that lights up overnight
UnitedHealth implied volatility jumped overnight and the whole option chain lit up. Rich premium is exactly what a premium seller wants to see, and it is also the moment most mistakes are made. This clip from a live Elite Trader call shows what I did instead of clicking.
Price first, then ask why
I priced the iron condor at the new volatility to see what the market was paying for the risk, and only then went looking for the reason behind the spike. A move like this has a cause, a headline, a filing, a rumour, and the trade depends on whether that cause is done or still unfolding.
Trade it or wait
The rule is simple: an event that is already public and priced can be sold; a story that is still developing gets a day. The clip walks through the chain, the news check and the decision in real time, so you can see the order of the steps rather than only the result.
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