Actually, modern financial instruments enable you to profit off low volatility too; look into iron condors and calendar spreads. I imagine this is one of the more common insider trading opportunities, in fact: if you know beforehand that this quarter's earnings report looks a lot like last quarter's (or the same quarter from last year, depending on the business), for instance, which it often will.
What you really profit from is not volatility but surprise. If you know better than market, you should be able to find a way to monetize that knowledge. Of course, your profit depends on degree of surprise, so it's hard to make much money when the market is already close to right.
p
Actually, modern financial instruments enable you to profit off low volatility too; look into iron condors and calendar spreads. I imagine this is one of the more common insider trading opportunities, in fact: if you know beforehand that this quarter's earnings report looks a lot like last quarter's (or the same quarter from last year, depending on the business), for instance, which it often will.
What you really profit from is not volatility but surprise. If you know better than market, you should be able to find a way to monetize that knowledge. Of course, your profit depends on degree of surprise, so it's hard to make much money when the market is already close to right.
More options
Context Copy link