Insane Profit with High Volatility
By Ernie Varitimos
December 4, 2021
0:00 / 31:45
Insane Profit with High Volatility

How you doing friends Ernie here?

This is the or just zero dash DTE podcasts. The zero days to expiration podcast found on iTunes. Spotify, Amazon, I Heart lots of other places. And of course we stream live on YouTube. This is completely unscripted and we are here today. That's right. We are here today to talk about, this concept of high volatility trading with zero DDT.

Now in general, high volatility trading for most people, especially day traders is a difficult thing to master. As a day trader who's, maybe using technical analysis, it's virtually a landmine. However, when you're selling premium, We dream for days like day, we dream for that overpriced premium so that we can sell it and collect on it.

However, there are some trades that you put on. There are some positions that you create, that can be quite a bit or a little bit tenuous only because the PNL for your trade during the mid part of the day, while you're approaching expiration can be a little bit confused. Particularly when you're putting on a trade that is negative Vega or Vega negative and positive feta, meaning that it performs better or the trade behaves the way you expect it to behave.

When volatility is decreasing. Now volatility decreasing is a relative term. It has to start somewhere and then go down for. Act the way you were expected to act when volatility is coming down, the amount of premium that you're collecting per minute is increasing, or the rate of premium collection is increasing.

So that's all a good thing.

This, during the course of a day, you've got all these gyrations, the market's going up, it's going down. It's in a high volatility situation. The expected move is huge. You've got to expect a lot of back and forth, a lot of noise. And during that time, you're, let's say that you have a. And which is what we generally trade.

And we trade all different types of butterflies. We trade the symmetrical butterflies, which most people are familiar with. We trade the broken fly or broken wing butterfly where you have uneven legs, and that gives you different risk parameters. On one side of the butterfly versus another, we trade the unbalanced butterfly, which is essentially a broken wing butterfly with a credit.

Lapped right on top of it that shares the same short strikes as the underlying butterfly. And that can provide all other types of risk adjustment. Let's say. And maybe a little bit more juice, a little bit more credit for you to collect. Now, all of these things have their place based on the trade, the market profile, the market structure, the day, what's happening that day, the catalyst that may have been involved, is it a bullish or bearish day?

All of these are situations that we evaluate and then put on a butterfly. One of these three types of butterflies with the proper risk adjustment on one side or the other, depending on where market started and where we expect it to go to give us what we believe is the best opportunity to profit. Now, most people will be looking at that butterfly and thinking that, oh wow, butterfly, that's a really low risk situation.