Volatility Trading

Strategies which are designed to speculate or take a view on changes in market volatility rather than in market direction. In general, there are two basic volatility trading strategies that perform particularly well in high volatility markets: a straddle or a strangle. These two strategies allow investors to make low-risk, high-payoff trades without even having to rightly guess market movements. These strategies are direction-neutral, and could be applied on both sides of trading: as a buyer (long strangle, long straddle) or a seller (short strangle, short straddle).