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Learn Implied Volatility in Options To Make The Trading Call

Implied Volatility is probably the hardest of all the parameters But what is Implied Volatility. To understand Implied Volatility in options, we need to understand Volatility, Historical Volatility, and Future Expected Volatility for the Stock.
Every Option has a certain Implied Volatility that is calculated from the Option price, and this can be a real “wild card”. Make no mistake; miscalculations on Implied Volatility can break an Options position.
We need to understand the concept of Options Implied Volatility in simple terms, so we use our real-world examples again to grasp the concept thoroughly. Then we look at a great example of NFLX and CAT Options that clearly demonstrates Implied Volatility in action.
Options Implied Volatility calculations are ultimately backed out from the Option prices quoted in the Options market. Changes in Implied Volatility impacts Buyers and Sellers of Options very differently, and there is also a twist to this phenomenon.

Course Details

Types of Volatility

The difference between stock volatility and Options volatility, and the difference between Historical Volatility and Implied Volatility in Options are discussed in detail.

Buyer Seller perspectives

How does Implied volatility changes impact buyers and sellers of Options. Buyers and Sellers have asymmetrical positions when it comes to Options, and Implied Volatility in Options are no different. They affect Buyers and Sellers differently

Implied Volatility in Options

The classic dilemma – how do we estimate “future” volatility. Can Option prices tell us something about the future ? And how is this Future Volatility impact Implied Volatility in the Options market

Impact of Option expiry

How does the time to expiry have any impact on Implied Volatility. Implied Volatility in Options can have a very large impact for longer-dated Options than shorter ones.

Implied Volatility and Option Prices

Who decides what an Option price is when we do not know future volatility. This is key to understanding how Implied Volatility in Options are calculated

Impact of Option Moneyness

How does the moneyness of the Option – ATM, ITM and OTM affect Option prices and their differences. All of these factors make Implied Volatility in Options a complex subject.

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