How Can Traders Profit from Selling Options When Implied Volatility Is High? ⎊ Path

How Can Traders Profit from Selling Options When Implied Volatility Is High?

When implied volatility (IV) is high, option premiums are inflated due to the increased extrinsic value. Traders can profit by selling (writing) options, collecting the high premium, and betting that IV will decrease (a 'volatility crush') or that the option will expire OTM.

This strategy aims to profit from the eventual decline in IV and the erosion of extrinsic value.

What Happens to the Moneyness of a Call and a Put Option If the Underlying Asset’s Price Equals the Strike Price Exactly at Expiration?

At What Point Does an OTM Option Become Worthless?

Why Do Traders Often Sell OTM Options?

Who Buys a Call Option and Why?

How Can a Trader Profit from a Discrepancy between Implied and Historical Volatility?

How Do Options Traders Use a Short Strangle Strategy to Profit from High Implied Volatility?

What Is the Maximum Profit for a Short Call Option Position?

When Should an Investor Buy a Put Option?

Glossar

Selling Options

Framework ⎊ Selling options within cryptocurrency derivatives represents a strategic framework for generating income or hedging risk, predicated on anticipating price movements.