As we mentioned in Volatility Explained, volatility is like a rubber band, and tends to revert back to its historical average. Selling credit spreads attempts to take advantage of this by selling options with relatively high prices, hoping implied volatility recedes back to normal levels. One ...
Indeed, during the take over of meme stocks in 2021, as explained inmeme investing, Robinhood stopped the trades of some of these stocks (like GameStop) claiming a liquidity/risk insurance policy. Yet some doubted that this was also due to the fact that retail traders were squeezing out of...