It is important to know how to calculate the actual and accurate volatility of the spread because the current volatility level of the spread is one of the best ways to determine whether the spread is expensive or cheap in relation to the average volatility of the stock.
There are several ways to calculate the average volatility of a stock.
There are also ways to determine the average difference between the volatility levels for each given expiration month.
Volatility cones and volatility tilts are very useful tools that aid in determining the mean, mode and standard deviations of a stock's implied volatility levels and the relationship between them.
The present volatility level of the spread can then be compared to those average values and a determination can then be made as to the worthiness of the spread.
If you now determine that the spread is trading at a high volatility, you can sell it.
If it is trading at a low volatility, you can buy it.
But first you must know the current trading volatility of the spread
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