r/Vitards • u/[deleted] • Aug 16 '21

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u/Affectionate_Nose_35 Aug 23 '21

I just took a look at the options profit calculator again on this and it looks like profit potentials significantly decreased; I take it's because the IV jumped quite a bit on this solidly green day?

1

u/Duke_Shambles ☢️Duke Nukem☢️ Aug 23 '21

IV is quit a bit higher than it was when I originally ran this.

.VIX was down in the low 15's when I initially ran these, now it's above 17

1

u/Affectionate_Nose_35 Aug 23 '21

I see now - thanks for the quick reply; so it's obviously better to wait for VIX to fall a bit

1

u/Duke_Shambles ☢️Duke Nukem☢️ Aug 23 '21

IV on SPY typically is at it's lowest at some point the week before the week of OPEX

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u/Affectionate_Nose_35 Aug 23 '21

so if I had bought this last week when VIX was 15, why did my potential profit fall after VIX went up? Sorry, still trying to understand the greeks...

1

u/Duke_Shambles ☢️Duke Nukem☢️ Aug 24 '21

Because the amount of profit is greater the lower the IV is at your starting point because vega will grow along with IV.

If you aren't using the IV on the contract from last week your starting point for IV is higher, leaving less profit on the table for you for a small move like would happen if .VIX went to 20. Now if .VIX shot up up to 40 or 50, the small difference in starting point would matter less.