Market Measures - February 8, 2021 - Can We Time Long Premium Trades?
Timing long premium trades is near impossible because when the market is in a state of calm and IV is low, there is no statistical significant methodology to predict an upcoming expansion.
Since IV overstates HV 83% of the time, we know that not only are short premium trades profitable more than 4 out of 5 times, but predicting a contraction in fear is MUCH more statistically viable since IV expansions usually last 12 days on average as opposed to a lull which lasts 42 days on average, but can last as long as a year or more.