Build positions based on difference between Estimated Future Volatility (EFV) and Implied Volatility (IV)
If EFV > IV: buy options
If EFV = IV: long/short futures (or synthetic by options market)
If EFV < IV: short sell in options market (most usually)
Volatility smile effect (different values of IV in close options’ strikes) leads to construction of sophisticated derivatives positions containing certain kinds of call/put spreads and straddle elements.
Extensive analysis of different skews of volatility smiles and taking into account market and timing conditions allows creation of highly developed option trading positions with statistical arbitrage capabilities.