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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Sunny Jim who wrote (43834)3/22/2000 1:08:00 PM
From: Casaubon  Read Replies (1) | Respond to of 99985
 
IV: implied volatility. It is back calculated from the black scholes (or other) options pricing equation based on what people are willing to pay for options, as opposed to calculating what options prices should be based on how volatile the stock has behaved historically.



To: Sunny Jim who wrote (43834)3/22/2000 2:06:00 PM
From: Haim R. Branisteanu  Respond to of 99985
 
SP I hope Casaubon answer satisfy you.

The option pricing many times anticipate future moves. The B&S formula relies on past volatility which time frame is chosen by the user.

Strongs moves increases volatility but if no other moves are anticipate then the IV drops to the relative normal values. Wen IV still stay high further high volatility is anticipated by market maker who usually know much more than we do.

BWDIK
Haim

Haim


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