The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about why 20% volatility in stock prices should be expected by all investors. In fact, you could even substitute stock prices for portfolios, options trading strategy, basically any investment strategy at all. It pretty much is the standard that most investment strategies on a long enough time horizon are going to go through some sort of drawdown or drawdown period and probably a minimum, we’re going to see a 20% drawdown at some point. In fact, most of the strategies that we back-test through our back-testing software and in the profit matrix research where we put together, went through a period of 20% drawdowns at some point in the cycle. It may have been 25%, may have been 18%, but somewhere around 20% drawdowns. And so, for most stocks in general, 20% volatility is kind of the normal. I feel like people actually worry about a 20% move in a stock, but the reality is that if a stock m