Market Direction and Delta-Neutral Trading

Professional options traders think in terms of spreads, and they hedge themselves to stay neutral on the market's direction. The direction of the underlying stock is less important to them than the volatility of the options (implied volatility) and the volatility of the underlying stock (statistical volatility).

These professional options traders also let the market tell them what to do. They recognize the market is saying that the appropriate strategy is to sell premium when option volatility is high. Conversely, they understand the market is saying that the low-risk strategy is to buy premium when implied volatility is low. ...