A.I.M. Users Bulletin Board

[Neil Scott]

Option Volatility,

I have been scanning the option implied volatility charts over here and it is very interesting.
The volatility is the highest its been in the recorded data I have, now that is only 4 years admittedly but it shows an interesting story that would be applicable at your end.

If you want to purchase shares for your accounts and want to get better prices then selling Put options is a good way, but, you have to pick the time to do it.
That time is when volatility is high as when IV is high so are premiums. I am very tempted I must admit.
Stocks here such as QBE Insurance are selling below valuation and the options are hitting 44% IV where the average over the preceding 4 years has been half that.
The only problem I have is that the contracts are for 1000 shares and so I can't use it as an AIM trade but it could be a way of setting up a new account.

So if you write the Puts you either be assigned or not depending upon the end price but pocketing good premium income on a good blue chip that is well under valued would be a good (but risky due to position size) way of picking up discounted shares.

Regards

Neil