Why implied volatility is a key metric for options traders

From the creator

Listen and subscribe to Stocks In Translation on Apple Podcasts, Spotify, or wherever you find your favorite podcast. In this episode of Stocks in Translation, tastytrade Founder and tastylive CEO Tom Sosnoff, joins Markets and Data Editor Jared Blikre and Producer Sydnee Fried to discuss implied volatility and how investors can use it to their advantage when trading. Blikre defines implied volatility as a measurement of expected future price wins in a stock or option. “The easiest way to look at this is the higher the implied volatility, the larger the expected move,” Sosnoff explains. “It just means that plus or minus, it is going to be a bigger move, which means more opportunity. So the higher the implied volatility, if you’re a premium seller, it’s better. If you’re just a directional trader, it’s better. If you’re an opportunist, it’s better. So for self-directed investors and institutional investors as well, higher volatility means more action, more fun, and that’s why you’re seeing the huge option volumes we’ve been seeing lately, that’s why you’re seeing the huge futures volumes, and that’s why you’re seeing all the general activity in the markets.” Fried asks Sosnoff for any tips everyday investors can use to take advantage of implied volatility. Sosnoff says looking at implied volatility ranks makes a difference. The ranking is a scale from zero to 100, and it gives context of how a stock is doing. Using Tesla (TSLA) as an example, Sosnoff says, “Right now the impli

Published 2025-03-06 · Watch on YouTube ↗
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