13
Feb
10

Siempre mirar y entender la volatilidad

Es la recomendación que hace Adam Warner en su post en Option Zone

Volatility levels can and should dictate everything about your trading, from price targets and stop levels to position sizing.

(…)

But for the purposes of this example, let’s just say a 2% move is the daily expectation for XYZ. That, of course, is $1 for a $50 stock.

Now, suppose the volatility of XYZ volatility doubles to 64. Now the market prices in $2 or so moves per day. The risk level of your trading, therefore, has now doubled.

If you maintain the same size position, or day trade with the same quantity as before, you’re essentially doubling your exposure. That’s only a good thing if you win.

(…)


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