As expected by many, the IV Crashed on 18 Sep 2015 for most of the counters, thereby decreasing the values of the Calls as well as Puts.
During such events, the temptation for taking a directional bet by either buying a naked Call or Put, is quite high among the retail traders. I myself suffer from this temptation !
But most often, such retail traders end up in loss because of the IV Crash that happens after the high volatility event. The exception is that scenario in which market makes a very big move in our favorable direction, which will overcome the effect of IV crash and still give us some good profits. But such occurrences are quite rare.
Thanks and regards
During such events, the temptation for taking a directional bet by either buying a naked Call or Put, is quite high among the retail traders. I myself suffer from this temptation !
But most often, such retail traders end up in loss because of the IV Crash that happens after the high volatility event. The exception is that scenario in which market makes a very big move in our favorable direction, which will overcome the effect of IV crash and still give us some good profits. But such occurrences are quite rare.
Thanks and regards