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The Importance of Volatility Premium
Read the full article: http://www.condoroptions.com/2008/02/14/the-importance-of-vo...
You might say that the three key components of any options trade are time, price and volatility. That is to say: the time left until those options expire, the price of the underlying, and the volatility implied in the options prices. It’s easy to forget that last component, and sometimes people don’t take implied volatility into consideration when opening trades.
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