☸️Low Volatility Options
Last updated
Last updated
Making profits when the market is trading sideways
In low volatility markets, you can profit from minimal price changes using two strategies: Long Butterfly and Long Condor. Both strategies aim to make profits when the price of an asset stays relatively stable.
Structure: Sell ATM Call and ATM Put, and buy OTM Call and OTM Put (Narrow and Wide ranges available).
Cost: Low.
Profit Potential: High if the price stays near the strike price.
Use Case: Ideal for betting on low volatility.
Example Reasoning: “I don’t care what the price will be, but if it doesn’t change significantly, I win.”
Key Point: Profitable when the asset’s price remains stable; loses if there’s significant price movement.
Structure: Sell OTM Call and OTM Put, and buy higher OTM Call and lower OTM Put (Narrow and Wide ranges available).
Cost: Low.
Profit Potential: Decent if the price changes slightly within a ~10% range.
Use Case: Ideal for betting on low volatility.
Example Reasoning: “I don’t care what the price will be, but if it stays within a small range, I win.”
Key Point: Profitable when the asset’s price moves within a small range; loses if the price moves significantly outside the range.
Profitability: Both strategies are profitable when market volatility is low.
Immediate Profit: You start in profit after purchasing the strategy.
Expiry: You need to wait until expiration to realize any profits. Parameters can’t be changed or exercised early.
For low volatility markets, the Long Butterfly and Long Condor strategies offer ways to profit from minimal price changes. Choose the Long Butterfly for higher profits near a strike price and the Long Condor for steady profits within a small price range. Both strategies start profitable and require holding until expiration for potential gains.
