Why Market Volatility Can Mean Higher Options Premiums

During their recent episode of the Acquirers Podcast, Travis and Carlisle discussed Why Market Volatility Can Mean Higher Options Premiums. Here’s an excerpt from the episode:

Because the more volatility you get, the higher the premiums you get when you’re selling the options. So I think ultimately it’s going to open up some good opportunities.

[Tobias] And that’s particularly useful if you’re an… Basically, we’re equity guys focused on the underlying equities and we use the options as when there’s good option volatility, that just gives you a lower price, a lower implied price for your entry point, a little bit more of a margin of safety. And if you’re not exercised, then it gives you a better return on the cash that you use to secure.

So that’s why we sort of make this value options report to demystify it a little bit. It can be a little bit complex. It’s complex to understand the first instance.

I think that it’s actually a pretty simple idea once you understand what’s going on. And that’s what we’re going to do this podcast for a long time to come. Just so we can get the message out there.

Value Options Letter combines value investing with conservative Buffett-style options strategies. Follow the strategy from cash-secured puts through assignment and covered calls, with ongoing trade recommendations focused on businesses they believe are worth owning.

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