How Defined-Risk and Undefined-Risk Strategies Respond to High IV

As premium selling tastytraders, higher implied volatility in the market is always beneficial to us. Not only does it lift option prices, but it also positions us to better take advantage of <a href="https://ontt.tv/3aZOTBp">volatility mean reversion</a> while allowing us to push the strikes on our strategies out even further out-of-the-money. But interestingly, higher IV doesn’t benefit defined-risk strategies and undefined-risk strategies equally. <a href="https://ontt.tv/MkDAD">Because of the friction</a> induced by the long options, defined-risk strategies can see their high IV benefits greatly reduced.