Try Our New Options Trading Tool: VolCharts!

We’re proudly announcing the release of IVolLive Charts, our latest tool powering options trading with volatility driven analytics.

All charts are powerful, but IVolLive charts are the first of their kind, delivering functionality born out of the professional trading community. Let’s go over some of the key strategies these charts enable and the features that make that possible.

Divergence Trading

Look at divergence between spot prices and volatility and you’ll find a world of alpha. By combining our proprietary IV Index (IVX), predicting forward stock volatility through options prices, with a clever layout, IVolLive Charts empower traders to deploy divergence trading strategies previously reserved for the professional traders with 6-figure analytics and technology budgets.

In the first example, taken on the 13th Dec’21 with 1-minute snapshots, we show how our proprietary IVX measure started to move higher while spot remained flat, a sign that volatility markets were bracing for a possible move lower in the spot market. We saw this prediction bear fruit with an aggressive move down in SPX towards close.

In the second example, we can see how IVolLive charts lends clarity to GameStop’s story. The top chart visualizes build-up in call open interest throughout 2020, well before the stocks “moon” in January 2021. This movement signaled growing positive investor sentiment before the story hit the news.

Relatively, the bottom chart demonstrates that put open interest grew only when the stock went parabolic, peaking during the height of the gamma squeeze in early 2021.

Identifying Opportunities with Term Structure Analysis

Trading opportunities become apparent with IVolLive Charts. Our term structure charts give insight into volatility variations between two dates, helping you locate the best trades from a volatility perspective.

In this example, we can see that the very front end of NDX’s volatility curve (measuring how volatility changes as you move through the term dates, i.e. contract expirations) inverted on December 13th 2021 with the 14 days forward volatility becoming the new low in term structure.

Using the historical implied volatility surface chart, we can see that over the last 6 months, the 14-day IV was consistently above the 7 day IV for the ATM strike. The recent inversion might be a signal to traders that 7-day options are expensive relative to 14-day options.

Used in combination with our other tools such as the advanced options chain within IVolLive, we can quickly see that 14 day 16,075 calls in NDX are priced at 254 while 7 days 16,075 calls are priced 190 or a 64-point difference between the two options.

To help you take your trading to new heights with IVolLive Charts, we’re currently offering a 2 weeks free trial.

Visit https://www.ivolatility.com/compare_packages.j to claim your trial today.

Video Tutorial is available at: https://www.youtube.com/watch?v=VGuGubaB32g

IMPORTANT DISCLAIMER

There are risks associated with investing in securities and derivatives. Investing in stocks, bonds, exchange traded funds, mutual funds, and money market funds involve risk of loss. Loss of principal is possible. Some high-risk investments, such as options and other derivatives, may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods.  A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance. By trading derivatives, or any other vehicle for leverage, you may incur greater losses than the principal investment.

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