The Hidden Secret to Finding Dirt-Cheap Options: A Strategy Professional Traders Doesn’t Want You to Know

When I started Option Trading, I use to randomly select Options without any logic in it. But Slowly, I mastered the art of selecting Options Strike.

The thing I keep in mind is that

1. The Option Should be Slightly OTM (I know that owning ITM is fantastic for huge return. But then premium are high. And I want maximum return for mu buck)
2. Then the Strike I chose should be available at a discount.

Now, how do we know that it is available at a discount or at a cheaper rate.

So, for that we have a concept called as “Volatility Cone”. I find it very interesting.

What is Volatility Cone?

To understand Volatility Cone you need to understand how it is built. So, let me explain the steps and then you will know why it is called as a Volatility Cone.

1. First you need to import data for last 1 year or 2 year (Daily Close Price) and also the date for Option Expiry in each of these months.
2. Now for each Month of the data you have calculate the Historical Volatility using 10 days Data before the expiry. Now repeat this step for 20 days, 30 days , 40 days , 60 days and 90 days.(You are…