By John Summa, CTA, PhD, Founder of OptionsNerd.com
Trading options without an understanding of volatility is like operating on a patient without knowing what role blood flow plays in the human body. Unfortunately, too many traders launch into trading without the proper knowledge of volatility.
A misunderstanding of volatility's dynamics can lead to painful losses, which otherwise might not have been experienced. A proper understanding of volatility, on the other hand, can inject enhanced profit potential into strategies.
Toward this end, this tutorial has highlighted the following essential areas of volatility to provide a basis to explore the subject in greater depth later (see suggested resources below).
 Understanding the difference between historical and implied volatility
 Applying historical and implied volatility to pricing and valuation determination
 Getting a feel for how volatility impacts option strategies' potential risk and reward
 Acquiring insights into implied volatility skews
 Using options volatility to predict price moves
 Analyzing investor crowd psychology with options implied volatility (VIX)
To further develop you knowledge of volatility, check out "Option Volatility & Pricing: Advanced Trading Strategies and Techniques" by Sheldon Natenberg (second edition, 1994). Another recommended test is "Options As A Strategic Investment (fourth edition, 2002) by Lawrence Mcmillan. These two books should provide all the necessary concepts needed to fully understand volatility in all aspects of trading options.
Related Articles

Trading
Implied Volatility: Buy Low And Sell High
This value is an essential ingredient in the option pricing recipe. 
Trading
Implied vs. Historical Volatility: The Main Differences
Discover the differences between historical and implied volatility, and how the two metrics can determine whether options sellers or buyers have the advantage. 
Trading
What is Meant by Implied Volatility?
The estimated volatility of a security's price. 
Trading
Option PriceVolatility Relationship: Avoiding Negative Surprises
Learn about the pricevolatility dynamic and its dual effect on option positions. 
Investing
3 Reasons to Ignore Market Volatility (VIX)
If you can keep your head while those about you are losing theirs, you can make a nice return in roiling markets. 
Trading
Options Trading: How Implied Volatility Affects Calendar Spread
Even if the risk curves for a calendar spread look enticing, a trader needs to assess implied volatility for the options on the underlying security. 
Trading
Volatility's Impact On Market Returns
Find out how to adjust your portfolio when the market fluctuates to increase your potential return. 
Trading
An Option Strategy for Trading Market Bottoms
The reverse calendar spreads offers a lowrisk trading setup that has profit potential in both directions. 
Trading
Understanding Vega
In options trading, vega represents the amount option prices are expected to change in response to a change in the underlying assetâ€™s implied volatility. 
Trading
Ratio Writing: A HighVolatility Options Strategy
Selling a greater number of options than you buy profits from a decline back to average levels of implied volatility.