re: Twitter puts

quote:

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Usually I sell calls on top of a spike. Also when implied volatility is high. As the implied volatility drops the harder it is for contract to swing in the purchasers favor. Stock price can even rise or drop a whole point and purchaser’s profit may not even budge.

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I meant to say earlier that that is the smart/correct way to sell premium. You sell when IV is relatively high (like above the 50% rank) in expectation of a retraction in IV. Think of it as a reversion to the mean. That in itself will bring down the price of the options and take your short position to profit.