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Volatility Trading

Definition

Trading strategies designed specifically to profit from changes in implied volatility rather than directional price movement. Includes long/short volatility, volatility arbitrage, and dispersion trading.

Example
A volatility trader sells straddles when IV rank is above 70% and buys straddles when IV rank is below 20%.
Related Terms
Implied Volatility (IV) IV Percentile IV Rank Volatility Arbitrage Volatility Index (VIX)
Frequently Asked Question
What is Volatility Trading?
Volatility trading bets on whether IV will rise or fall rather than on stock direction. Sell volatility when IV is expensive (high IV rank); buy volatility when IV is cheap. VIX products and options are key instruments.
APA Citation
Clark, R. (2025). Volatility Trading. VixShield Trading Glossary. Retrieved from https://www.vixshield.com/glossary/volatility-trading
RC
Russell Clark, FNP-C
Author of SPX Mastery series · Founder of VixShield
Last updated:  ·  Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.