27/5/2024, 4:37:03 pm

Understanding the Dispersion Trade Strategy for Option Volatility

The trade known as a dispersion trade is quite complex and is primarily applied by professionals who deal with options relating to the index as well as its components. In a standard dispersion trade, traders executing dispersion trades might sell calls on an index (e.g., Nifty Index) while simultaneously buying call options on individual stocks that make up the index.