Volatility

Volatility is Risk. Volatility describes the degree to which the Stock Price tends to move over a period of time.

Volatility has the biggest influence on the option’s Extrinsic Value.

In our Swing Trading System, we seek to avoid volatility as much as possible.

As such, we prefer to buy options that are at least one-step “in-the-money” or more. This is because the deeper in-the-money,

• the higher the intrinsic value, and 

• the lesser the extrinsic value (hence reduced volatility) 

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