how are you doing friends? o not Got a question. What is more important to people in today's world. Is it the nature of the origin of the universe or the answers that lie out there beyond, or is it a popular sitcom show that is now canceled, but in syndication around the globe, you get it?
You're right. It's the sitcom. The name of this episode number 22 of the 0DTE podcast is the Big Bang Theory is Volatility Back, has it returned and it looks like it has, this is a welcome site. I'll tell ya. When volatility is low, it makes analysis of the market extremely difficult. And there are a number of reasons.
First of all, really you need to trade less. And that's because the signals aren't as sharp. They're not as strong. They're not as clear volatility is down. Liquidity is down. Volume is down.everything is down now while some people think that there is actually more, more security , more predictability in a market that doesn't move much.
That couldn't be further from the truth. It is far more difficult to pick a direction. It is much easier when the market has momentum. And it's really got some strength behind it. It's moving up, it's moving down now. It's really in the short term, by the way, this is not something that you can extend out to a long period of time.
Between 17 and 34, the vicks has a kind of a sweet spot. We call that the sweet volatility regime. That's what I just made that up by the way.
But that's what I'm going to call it from now on the sweet volatility regime. It's a volatility regime where you get the, what I consider the optimal opportunities and. Both in ease of analysis of the market and also the amount of premium that you're afforded by that much volatility. Once you get beyond that are higher things, start getting a little chaotic
Below 17. I think it's even worse because things are anemic. It is difficult to grab a hold of anything. If you're familiar with. Signal to noise ratio. And you could probably, even if you aren't, even if you're not someone into electronics or into radio or whatever, you could probably understand that. Trying to grab a signal with a radio or some other device really depends on how clear that signal is and how much or how little interference there is around it.
The interference is referred to as noise and the signal is. the thing that you're trying to capture like a radio broadcast or something. In this case, it's the market telling us what it's doing. And when a signal has very high amplitude, it's like this, it's very clear relative to the noise.
Maybe the noise is only this big, but the signal is this big. It's very easy to discern that it's like that in anything in the world. If you're a, for instance, out in peering across a field, And there is absolutely beautiful, clear conditions. You can see things for miles if fog sets in and that's the noise, or if there's a bunch of people running back and forth, you can't focus on something further down across that field.
That's the noise. And so when volatility gets very low, the signal gets low. Now the noise in the background, it doesn't even have to change. It can be the same level of noise, but when the signal comes down to the level of the noise, it becomes very difficult. Hope. This is making sense, right? Noise, the noise to say ratio is very important.