“The trade is to really get out there and make a statement and buy volatility at these levels," says Alex Panagiotidis, managing director of Sterne Agee Institutional Equity Options.
It’s worth fighting the time decay because investors would be buying ahead of earnings and other potential market moving events including the possibility of a Greek default or other disruptions in the euro zone, Panagiotidis says.
The March at the money straddle on the S&P 500 Trust is “extremely cheap” trading at about $8.00 or an implied volatility of roughly 20 percent, he went on to say.
Conversely, for traders that prefer to be net sellers, it’s getting harder to find those rich option premiums.
“Overall, the market has dropped dramatically, the premiums have dropped dramatically,” says Bill Lefkowitz, an options strategist with vFinance Investments.
“But if you look hard enough," Lefkowitz says, "you can still find premiums.”
Lefkowitz sold Google January 560 puts Wednesday for a dollar ahead of its quarterly earnings report expected after the bell on Thursday.
Bottom line: selling on single stock stories remains in vogue but overall, cheaper volatility makes this a buyer’s market.