Know in Advance When Option Premiums Fall! | Implied Volatility & IV Crush Strategy

[00:01] Welcome all of you to another new amazing learning video. And in today's video we're going to talk about IV, about implied weightage. If you buying or selling options, and if you do not know how to use IV properly then

[00:17] you will never get long term success in options trading. If you want to make money in the market for a long time, survive in option trading for a long time , be profitable, then you have to master IV.

[00:31] master IV. in today's video I'm going to explain how IV is a secret weapon of the smart money, the big players. And how

[00:47] can you use IV in your trading to your advantage? When is it right to buy options and when is it right to sell options? How to use IV during events? If the IV suddenly spikes, how should you trade? Many such

[01:00] trading opportunities create IV for you where your risk is negligible and your reward is huge. So in today's video we will understand in detail how you can use IV for your favor.

[01:16] please subscribe to the channel. Press the All button on the bell icon so that you get all the notifications on time. And before this we had made a detailed basic video on Ivy named The Magic of Ivy. If you have not checked out this video, please

[01:29] watch it once so that your basic doubts get cleared here. Because what we are going to talk about here is going to be at a slightly advanced level. I won't tell you how to look at IV? Where do you see IV from

[01:41] ? We have covered all that in that video. The Then you definitely have to jump on this video.

[01:55] and this is not a financial advice. Please do your own research and trade at your own risk. Well, what are we going to talk about in today's video? First of all, let's Although I have explained it in great detail in that video, still I will make you

[02:09] revise a little about what IV is? After that I will talk about the difference in thinking between retail traders and smart money. There is a difference in the way retail money thinks about IV and how smart traders, the institutions, analyze IV behavior.

[02:25] analyze IV behavior. , you think like retail then you have to understand that you cannot make money from the market. If you want to create an edge and become profitable, you need to follow

[02:39] smart money. And how can you follow them, you will get all the clarity in today's video. Meaning this video is going to save you a lot of money. A lot of time is going to be saved. And you will also be saved from many losses. But you have to watch the entire video. There are a

[02:52] lot of moving parts in the video. If you skip even one thing, the entire video can be a waste of time for you. We are going to

[03:05] secrets of IV in front of you. Again all these things are the content of our paid course. But I want to supporting us a lot. And every person deserves to get quality

[03:20] education absolutely free of cost. And our initiative of Markets with Mac is that we will

[03:37] not need to take any course here. First of all, let's talk about brother, what is IV? See, if I talk about IV, the full form of IV is Implied Volatility.

[03:49] Now look, you will have to understand one interesting thing that our market is not one dimension but it is three dimension. In option trading, you might think that if the price goes up then the premium of my call will increase. If the price goes up,

[04:04] my put premium will decrease. This does not happen. Option trading is not just dependent on price. Price is a component. Apart from this there are two more components. The first is time. The second is volatility. By

[04:19] combining these three, you can be successful in option trading. If you missed any of the three. If the price is wrong, you board the wrong train, you board at the wrong rate, you

[04:31] board at the wrong place, then there will be trouble. If you climb at the right place but at the wrong time, there will be trouble. Climb at the right place, at the right time but you can get stuck because of the wrong one. So in today's video we'll talk about how to master that. So our IV

[04:47] always tells about the mood of the market, brother, what does mood mean? The simple meaning of mood is whether the market will make an explosive move, will the market make an explosive move, will the market remain silent or will the market remain volatile?

[05:01] Basically this is what IV tells us because the market behaves in three ways. It either moves trending or moves sideways or moves volatile. So you need to understand that IV does not tell us about direction.

[05:14] IV will not tell whether the market will go up or down. What I said is that option trading has three components. Price direction needs to be known. Follow the price of the price. Price direction needs to be known. Follow the price of the price.

[05:27] She will tell you whether there will be a big move, a small move or time is going to pass here. This is the work of IV. So IV tells us about the mode of the market. Does n't tell about direction. And one more thing you have to understand is that if

[05:42] IV grows on its own. Where to check IV ? This is a very basic thing. Go and watch that basic video of mine. Otherwise, even if you search normally, you will find websites like Sensible. There are websites like Obstra.

[05:54] You will easily see IV there. You will find IV for every index stock that trades in options. index stock that trades in options. regarding IV, you can go there and watch them. Ok? So now you understand what IV is.

[06:09] Ivy watched how he understood. Now brother, one more thing has to be understood that if your IV increases. thing has to be understood that if your IV increases. When IV is increasing, we When IV is increasing, we call it volatility expansion.

[06:22] IV represents volatility here. So what do we say when ivy grows? Volatility is expanding. What do we say when IV decreases? Volatility is compressing. And volatility

[06:36] is very important somewhere. Many times we think that the price will tell us whether there will be a big move in the market or not. It is wrong. The volatility always tells you and how it tells and how there is a big difference in thinking between us and

[06:52] smart money, retail traders and institutions, I am going to tell you that, then we will

[07:05] one thing is that you this somewhere brings motivation and it feels good. Right? First of all, let us

[07:17] and this is very important. See what we retail traders think? As soon as a big candle is formed, whether it is green or red, brother, we buy the option. Brother, as soon as any news comes, we buy the option.

[07:31] As soon as the expiry day arrives here, we feel that brother, today is a lottery. Today is the chance to double and triple your money. So if we are not able to make money from the market. Unable to make money from stock market, option trading, option buying, option

[07:43] selling. So the region is not an operator. It is not even with reason. Reason is not a broker. The reason is yourself. The day you start taking accountability that there is a difference in my thinking. My thinking is wrong. I am perceiving the market in the wrong way.

[07:58] I am becoming greedy. The day you start accepting all this, you will see that your thought process will change. You will do very well in end trading. Hey brother, if a big candle is forming then why are you buying the option? Option

[08:11] buy had to be done before the formation of a big candle. Ok? If news is coming then the news should be positive and negative. Why are you buying options? Do you know buying options? Do you know

[08:24] know. All you know is a little basic thing that if the market goes up, buy a call , if the market goes down, buy a put. Thinking about this, you say goodbye. If you do not know the rules of the Thinking about this, you say goodbye. If you do not know the rules of the field in which you are playing, or the game you are playing,

[08:37] field in which you are playing, or the game you are playing, your fault that you didn't do your homework properly. And in today's video, whether you're buying or selling options, I'm going to help you

[08:49] do your homework properly and understand the rules, which are very important for you to win. what do you think, if the premiums are cheap then there can be double or triple premiums, I can catch it. These are bad habits. These bad habits have to be eliminated from today itself. You will have to

[09:04] promise me that from today onwards you will not buy options on big candles. You will not trade like a lottery at expiry. You wo n't gamble your money. And You will have to accept this. You will have to promise me. You will have to promise me in the end comment.

[09:18] I want to see how many people make this promise. They pledge that they will trade in a disciplined way from here on. The joy will come only when you look inside yourself and correct your mistakes. If you agree with this then

[09:32] like the video. Now let's talk about smart money thinking. See what the smart money thinks? Smart money thinks this brother, when IV is high. When Ivy is high. IV if IV increases from below. When the IV from the IV down here. Let's say

[09:47] let's suppose 12 is here let's suppose 15. Ok? So here we saw a jump in IV. What have we learned now ? We have learnt that brother, when there is a jump in IV, then the ? We have learnt that brother, when there is a jump in IV, then the

[10:00] premium jumps. Ok? So the normal mindset is that if IV is going up then the option premiums will be expensive. So when IV is going up buy the option because the premiums will go down and become more expensive. This is your thought process. But

[10:13] what do the big players do? Big players say that brother, it is in our hands to make IB expensive and option premium expensive. When the IV grows significantly. When the option premium increases significantly. You think for yourself that brother, when IV increases, a

[10:28] spike is seen in IV, then the option premium increases. But option premium also has two components. One is intrinsic value and the other is time value. This int this IV is the second one. This is an IV with intrinsic value.

[10:43] This is time value. So what increases your option premium when IV increases Intrinsic value does not increase your option premium because intrinsic value depends on the direction of the move. increases, the time value within the option premium increases.

[11:00] IV is increasing then buy the option. But a smart trader thinks that when IV is increasing, the option premium is increasing. Option premiums are rising. I buy the option when the time value is increasing ? Rather, I am

[11:14] getting more time value than before by selling the option. So why don't I sell it selling the option. So why don't I sell it and make it zero? Why don't I sell it and make it zero? So what do big traders do ? They wait for the IV

[11:26] spike. And as the IV spikes, they see a strong IV spike instead of buying options and selling options. When the IV is low, people think that the IV is falling, the premium is falling. When the IV is low,

[11:39] what they do is they buy the option. So, what you have to do is, when the IV is high, don't buy options, instead wait for the IV spike and sell options. Sell time value so that you can take advantage of it. Okay, well, if there is an event, suppose

[11:54] your budget is over, or an election is over, or an RBI meeting is over, or a Fed meeting is over, all the important events that happen, the Fed meeting is over, all the important events that happen, the

[12:07] If I talk about the budget, about the budget, then you should notice that any event in IV is over. You should notice any event that is a defined event. Defined means

[12:22] that we know what this event is. The budget is a defined event but with an undefined outcome. Outcome means we do not know what will be good and what will be bad in the budget, we do not know when the general election is going to be held, we do not know for whom it is going to be held, we do

[12:36] not know what will be its outcome, so when a defined event with an undefined outcome comes, at that time you get to see a big role of IB, so what is the get to see a big role of IB, so what is the role of IB before the event, before the budget

[12:52] and after the event, after the budget, now the thing to understand is that till the time this now the thing to understand is that till the time this event is held, its secrecy is maintained. As long as the main suspense remains, the IVF

[13:09] grows. And because IV increases, option premiums increase. But as soon as the day of the event comes, the day of the budget comes, the day of the event comes. And as soon as the

[13:22] event starts, okay? The outcome comes slowly. As soon as the event starts, this suspense gradually ends. As the suspense dies down , The IV Starts Dropping. We call this IV Crush. And when IV crushes, the

[13:36] price of the option also falls at a very high speed and they also crush. So what do you do? What do the big players do ? Brother, what big players do is that the premiums become expensive before the event. They know it.

[13:50] collapse. So they wait for the event to happen. As soon as the event starts, we will press and sell the option. By pressing this, we are going to cash in this IV Crush

[14:02] here. Ok? Now let's talk brother, if you want to use IV as a in your trading, then in what ways clarity. And this is going to increase your confidence in trading a lot.

[14:16] When you do things with understanding, you may even go wrong. You will not have any doubt on yourself that brother, I did something wrong. You must know that I did everything right. Market It Just Wasn't Meant to Be. Right? So here if you want to use IV as a

[14:29] weapon it will help you. So first of all you have to understand that when IV expands i.e. when IV increases then how can you use it as an option buying opportunity ? See, you have to enter the IV then. You have to

[14:46] enter into option buying when your IV is low. Now the question is how to find out IV low ? To find IV low, you should use IV percentile. And again,

[15:00] what is IV percentile? How to use it ? I have explained this in that video. ? I have explained this in that video. You will find its link in the description box comment section. You can go and see how we can tell if IV

[15:14] is low or IV is high. So if you go and watch that video, you will get an idea. First Then go and watch that video and you will get all the answers. Ok? But I have also brought some advanced points for you in the video. So here you have to do

[15:27] option buying when IV is low. You have to do option buying here when there is calm in the market. When there is not much turmoil. When no one is interested here. When premiums seem cheap here. Now the question is

[15:41] how to know if the premiums seem cheap? For this I am giving you a small exercise. Ok? Nifty currently expires on Tuesday. It is possible that when you watch the video, it may be Monday or Wednesday. Brother, nothing is well. Earlier Nifty had

[15:54] Thursday expiry, now Nifty expires on Tuesday. What should you do? You mean the Tuesday you are seeing, let's suppose this is Tuesday, the 16th, suppose this is Tuesday, the 16th, right? From 16th to 23rd, you should

[16:09] right? From 16th to 23rd, you should wake up every morning. Isn't it? Wake up every morning and just wake up every morning. Isn't it? Wake up every morning and just observe

[16:21] Ok? Meaning, if Nifty is at 25,200 on Tuesday, then at the money stand is at 25,200 on Tuesday, then at the money stand means call of 25,200 and means call of 25,200 and put of 25,200.

[16:35] Ok? What should you do with these two? Look at the premium. What is the combined premium ? What is the combined premium of call plus put ? Suppose on Tuesday, for next Tuesday, when there are seven days left for expiry, then the premium is let's suppose

[16:48] 250. So you will notice every time, every Tuesday, when there are seven days left for expiry, when there are six days left for expiry, when there is one day left for expiry, when it is the expiry day, what is the premium of the strudel at the money, it is

[17:04] expiry day and today in the morning at 9:15 or 9:30, I am looking at what is the premium of today's strudel. If today's style premium is 220, then there is no guarantee that the style premium for the same expiry at the next expiry at the same time at 9:30 will be

[17:19] 220. It could be 250. It could be 200. So what does it depend on? It depends on the IV. If the premium is higher, like 250 from 220, then it means that the IV is increased here.

[17:34] Expansion is being seen in IV. If it is 200, it means compression is being seen in the IV. So this is something I can say without looking at the IV because I know the game. Do you know about all these things? If you don't know then

[17:46] start observing these things. Different Perspective: Look at the market from a different perspective. Only then can you make money from the market here. Well, another myth that many people have is that if I am taking a trade in any direction, suppose

[18:00] I took a trade for the upside, I did a call buy and the market went up but I did a call buy and the market went up but your premium is not giving you profit. your premium is not giving you profit.

[18:15] also bought the call and let's say you added the money call. Still your premium remained unchanged. If this has happened to you then let me know in the comments. So people hit their heads that although this is not so common, it does happen. People

[18:29] what did I do wrong? I entered. I captured the move. I captured the direction. Still my premium is not increasing. That happens because as I told you a while ago, option trading is 3D. It

[18:43] is three dimensional. Price is also important in this. Time is also important in this. Volatility is also important in this. You're only looking at the price so far. You are looking at the chart. You are missing these two factors. And the most important

[18:56] And the most important factor is volatility. When the IV falls, know whether the IV falls or not. When the IV is falling, if a crush is seen in the IV and at the same time if you buy options, then even if

[19:12] your direction is correct, you may incur a loss. Why? Because for example, if Nifty moves upside by 100 points here, then let's Nifty moves upside by 100 points here, then let's

[19:25] call option. Its delta value is 0.5. Ok? So your premium should increase by 50 points. But you did n't see IV. Now IV is when it is moving in the direction of 100 points. At this time IV drops by almost 35%. So what this means is that

[19:40] you have seen a bounce of 50 points , a spike of 50 points in your premium. Due to this drop in IV, there will be a loss of 50 to 60 points Due to this drop in IV, there will be a loss of 50 to 60 points

[19:52] got because of direction and the 50 to 60 point drop you got because of the crush of the IV because of the IV falling. So net net your premium remains the same. And you are confused that Bhaiya, the market has moved but my premium has not increased because you did

[20:05] not check the IV. So next time you are buying options, take a look at whether the IV is low here, whether the IV is high here and what kind of IV it is. Now if you have even a little doubt that Sir, how to find out IV low and high? So as I told you, you can see everything in that basic video.

[20:20] You will get all the clarity. The Magic of IV and Option Buying You will get all the clarity here. So I hope you have understood that only direction is not important to make money from the market.

[20:34] Price, timing and direction, price timing and all these three things are very important if you want to make long term money from the market. Then let's talk brother IB crush. Now this is a trading opportunity in which I made a lot of money.

[20:46] However, opportunities are not available here every day. Once a month, once every two months. But when you get it, making money is almost certain. Why? Because here my technique is that I think like big players. When IV suddenly

[21:00] think like big players. When IV suddenly spikes by more than 100%, you will mostly see this on stocks. Ok? Now suppose some news comes. You should go and check out Polycab. Polycab 2024 saw a spike in many IVs.

[21:14] Polycab 2024 saw a spike in many IVs. your IV spikes by more than 100%, that is to say in simple language, if suppose Add the Money IV is running at 15 and within two-four days this IV becomes 30, then

[21:27] it is a spike of more than 100%. When such a big jump is seen in IV in a very short time, it means that your premium would also have jumped at a very fast speed. Not in terms of price. It must have jumped according to the price.

[21:43] But what I mean to say is that the add the money option for call, let's suppose it will be at ₹50. If the IV is 15, as soon as the IV becomes 30, the out of the money call option will

[21:55] not be 50. This will cost Rs 150. Whereas it should be less. Because here there were 15 days left for expiry. There are 10 days left for expiry here. Still the premium is high. Why? That is because of IV expansion. So when in a very short time, an

[22:07] of IV expansion. So when in a very short time, an IV strike of 100%, 150% to 100% is seen, at that time one feels like buying the option, but if you put a little courage there and do option selling, then the rewards there are very

[22:20] strong because IV makes such a jump, such a spike, then it melts like this, when it melts, the speed at which you will make money will be very fast,

[22:33] you have to catch the IV crush and the IV crush will come only when a good IV spike because there is a pretty good IV spike before the event. So when you get a good IV spike, if you sell the option there after managing the risk and

[22:46] if you see even a little IV crush from there, your premium is going to melt like butter. So when can you try it here ? If you are doing event trading, then you can do option selling on the day when the budget is there, the day when the event is there.

[23:02] You can make good money there. Otherwise, if you want to trade in stocks, then pay Otherwise, if you want to trade in stocks, then pay attention to those stocks which are crashing 15%-20% in a day. Such a big lower circuit is visible in him,

[23:15] check his IV. If there is a jump of 150% in their IV, then there will be a great trading opportunity for you. Now the question is when should you not buy options according to IV? Because

[23:28] many of you, my viewers, are into option buying. Well, do one thing, option buying. Well, do one thing, seller or a swing trader. You definitely have to tell me in the comment section.

[23:40] But I know that many of our brothers, many of our subscribers, do option buying. So you have to understand that you should never do option buying. Meaning IV has already spiked a lot in a very short time.

[23:52] you think Ivy can spike more, which he can do. But if the IV starts falling from there, you will be in serious trouble. Even if the direction is correct, you may suffer loss because it matters a lot. Ok?

[24:05] When everyone here is talking about a particular move, that what a big move has come. What a great move. A bigger move is about to come. When everyone is talking about that move. come. When everyone is talking about that move.

[24:17] And when it comes to news, my brother, do not do option buying at all. It's simple. Stop trading on news. If you want to go long, stop trading on news. Because you yourself understand that suppose you are trading the news of Fed meeting.

[24:31] Ok? So the time when the Fed Chairman will say something here, will tell his decision here about rate cut, such a big candle of rate cut is formed. I am talking about 1 minute. By the time you think what should I do? This is how to react, till the

[24:45] price moves like this and like that then your stop loss will be blown away and if you say stop and I will not place stop loss then brother your luck will be bad, you will get liquidated very quickly, so what is the best thing that we should avoid such a

[24:59] what is the best thing that we should avoid such a situation where there is news, when should option buying be done, you should do option buying when the market is boring, when everyone is not talking about option buying, when the IV is very low, when the market is

[25:11] within the range, at that time if you get trade opportunities for option buying, it is price and without direction you cannot do option buying indiscriminately. You even in that boring market, if you have direction and you see a

[25:24] good opportunity there, then the premium is very cheap and the IV is very low, then you can buy very cheap options and make a lot of money. When volatility is compressed, it simply means IV when it is low and when premium feels cheap. Now

[25:37] for cheap and expensive premium, it is simple, what you do is, for the next three to four weeks Nifty Tuesday and Sussex Thursday, add the money and add 100 points out of the money,

[25:54] note down their premium in every expiry, for the next four weeks you will automatically see that at the same time when the same time is left for expiry, only 4 hours are left or only 5 hours are left and everything is the same, the strike price is also the same. Still the premiums are different.

[26:08] Because IVs go up and down. So IVs play a huge role here. So we have learned how to use IV as a weapon. Now it is the turn of pro techniques which are used by big traders here, through which they make good money from IV.

[26:22] If you are ready to understand it then watch the video, like it , comment on it but do

[26:34] press the All button on the bell icon. Please cross check once whether or not. Because I do n't want you to miss such high value videos here. So the most important secret of IV here is

[26:50] that if you are a high IV then big players never buy options. You always have to look at selling, not buying. The biggest change. If there is low IV then brother you have to prepare for buying. And you have to understand that

[27:05] you get to see a big move in the market only when there is an expansion in IV. Without increasing IV, the market cannot make big moves. If you want to know that the market will make a big move here. So first the IV will increase only then the market will move big.

[27:20] What did I tell you in the beginning? IV tells about the mood of the market. Mood means how big a move could be coming. So the big move will come later. First IV will expand. Only after that you will see a big move. It is not going to happen

[27:34] that first a big move comes in price and then IV is expanded. IV will always lead the price. Price will not lead Ivy. This is very important. Rest this video was a bit advanced. I know those who were complete beginners might

[27:47] not have understood some points. But if you watched the basic IV magic video and then watched this video, you would have learned a lot of new insights. What new did you learn from this video? Please tell me in the comment section. And

[27:59] You can give your opinion in the comment section. I will meet you in the next video. Till then stay safe. Have a nice day. Love you all.