At the end of the day, options trading on the retail side typically comes down to narrowing uncertainty as much as possible. It’s similar to an SAT question. While you may not know the answer directly, you can try to eliminate one or two of the false answers. With this simple approach, you can dramatically improve your chance of success.
One of the most important mechanisms that traders have at their disposal is volatility skew. This screener — which is one of the many you can enjoy access to with a Barchart Premier membership — allows traders to understand smart money positioning based on the premium structure of implied volatility (IV). A measurement of a stock’s potential kinetic output, IV is important because it’s a residual value from actual order flows.
