(and Why It May Finally Be Ending)
For what feels like an eternity, options traders have been staring at one of the tightest volatility clusters we’ve seen in years. Premiums have been lean. The usual fat opportunities to sell risk have been slim. It’s been like sitting in the calm before a storm, waiting for movement that just won’t come.
But here’s the interesting part: that cluster is starting to spread out. If you pull up a volatility chart, you’ll notice the compression loosening. The market may not have broken out yet, but the early signs are there, and those signals matter for traders who’ve felt handcuffed by months of low implied volatility.
What a Tight Volatility Cluster Tells Us
When implied volatility stays compressed this long, it creates a deceptive sense of calm. To many investors, it feels like “risk is gone.” To option sellers, it feels like there’s nothing worth trading.
But historically, volatility doesn’t stay bottled up forever. Tight clusters almost always precede wider distributions. Think of it like a spring coiled tighter and tighter, eventually it snaps. The direction may not be obvious, but the release is inevitable.
How I’ve Been Approaching This Market
As someone who mostly sells premium for a living, these low-volatility stretches can be frustrating. I’ve learned to adapt rather than chase:
- Widen strike selection. When the premiums are thin, I give my trades more breathing room. That means less upfront credit, but higher probability of success.
- Lean on relative volatility. Even when the broad market feels asleep, certain sectors or single names still flash opportunities. The vol chart isn’t flat everywhere, you just have to dig.
- Keep hedges on the radar. This is where VIX options, small SPY put spreads or bear call spreads (which over the last several months haven’t worked at all) can quietly play a role. If (or when) vol finally bursts, cheap insurance now can offset pressure later.
The Psychology of the Drought
The tougher battle right now isn’t technical, it’s mental. Traders get impatient. Subscribers email me asking, “When are the fat premiums coming back?” I empathize, I feel it too. But trading isn’t about exciting, it should be boring in its mechanics.
One of the greatest errors I see traders make in these environments is abandoning their process. They take setups they wouldn’t normally take simply because they’re “itching” for action. That impatience turns low volatility from an inconvenience into an actual risk.
The Opportunity Ahead
If the vol chart continues to spread, ever so slightly, as it has recently, we could finally see the kind of moves that make premium-selling strategies shine again. For disciplined traders, this is where patience gets rewarded. The weeks and months of grinding through lean setups set you up to take advantage of the fat pitches when they return.
It’s not about predicting when the release of the current vol cluster happens, it’s about being prepared when it does.
A Final Note
I don’t claim to have it all figured out. After 24+ years of trading, I’ve learned humility is more important than confidence in stretches like this. But I also know this: volatility never disappears. It only hides.
When it reappears, those who stayed patient and disciplined will be ready.
If you’d like to follow how I navigate these cycles week after week, I write a free newsletter, The Option Premium, where I share market commentary, trade setups, and lessons from running options portfolios. You can join here: The Option Premium – Free Weekly Insights. No marketing. No upsells. Just practical strategies, grounded results, and a wealth of quality options education designed for everyday investors and traders.
Because surviving the volatility drought is half the game. Capitalizing on its return is the other half.
Kindest regards,
Andy Crowder
Founder, Chief Options Strategist, The Option Premium
