How Can a Trader Use Vega to Take a Position on Expected Volatility Changes? ⎊ Path

How Can a Trader Use Vega to Take a Position on Expected Volatility Changes?

A trader who expects implied volatility to increase can buy options (long Vega) to profit from the subsequent increase in option premiums. Conversely, a trader expecting volatility to decrease can sell options (short Vega).

Vega allows traders to speculate on the market's perception of future price swings, independent of price direction.

How Do Traders Use Vega to Construct Volatility-Based Trading Strategies?

Does a Negative Funding Rate Increase or Decrease the Cost of Holding a Long Position?

Are There Arbitrage Opportunities in Both Backwardation and Contango Markets?

Why Is a Trader Who Sells Options Typically Interested in a Decrease in Implied Volatility?

What Is the Difference between a “Long Hedge” and a “Short Hedge”?

How Can a Synthetic Future Be Used to Hedge a Long Spot Cryptocurrency Position?

What Is the Difference between a Cash-and-Carry Arbitrage and a Reverse Cash-and-Carry Arbitrage?

What Is the Primary Difference between a Call Option and a Put Option?

Glossar

Expected Volatility

Projection ⎊ Expected volatility, within cryptocurrency options and derivatives, represents a forecast of future price fluctuations, derived from market prices of options contracts and statistical models.