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I have heard that there are ways that one can trade volatility with options. What option strategies can be used to do so?

Are the other ways to trade volatility besides with options? If so, what are they?

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    $\begingroup$ Originally options were used "to leverage stock prices", once people discovered the idea of Delta Hedging (about 1970) and thoroughly understood it, a new view of options emerged: the option market as the place where volatility is priced. $\endgroup$
    – nbbo2
    Aug 5, 2020 at 13:51
  • $\begingroup$ Sorry but I can't see the link between delta hedgind and volatility trading? $\endgroup$
    – mbz0
    Aug 5, 2020 at 14:08
  • $\begingroup$ You need to study modern theories of options such as Black Scholes (including its limitations) and how Delta Hedging works, then it will make more sense. The book by Sinclair mentioned below is not bad. $\endgroup$
    – nbbo2
    Aug 5, 2020 at 14:09
  • $\begingroup$ Once all option market-makers delta hedge and compete with each other, "who wins and who loses" is determined by how good each is at coming up with the right volatility. So the market-makers game is a volatility prediction game. $\endgroup$
    – nbbo2
    Aug 5, 2020 at 14:16
  • $\begingroup$ And what determines the 'right volatility'? $\endgroup$
    – mbz0
    Aug 5, 2020 at 14:17

1 Answer 1

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An example of volatility trading would be constructing pure long/short volatility positions by buying/selling strangles (OTM calls and puts) and then delta hedging the position with the underlying.

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