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If I were to trade options, I would watch and trade the option price and
not anything else. We know that the option price is affected by the
following variables:
Underlying security price
Exercise or strike price
Volatility
Interest rates
Dividend yield
Time to expirations
These variables fluctuate all the time between high and low. But the
effect that they have on the option IS reflected in the price unless the
market is not efficient which is another story.
Volatility traders that trade the volatility have to use historical
volatility as a guide. That is to say, that if volatility is at a high
then expect it to go lower and SELL it etc.
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