Implied Volatility & Standard Deviation Explained

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[sonoranitegemstone]

Years later and still golden info. John from 2024 sends a loud "Thank You" to the entire Tasty Team for their help in understanding the complex world and workings of options.

[cbassett]

Despite a degree in finance and a developed understanding of markets, IV was confusing the hell out of me in grad class. Four videos later, I checked out this overview. Within the first 3 minutes, my questions were answered. Straight to the point, technical, but not too wordy. Thanks Mike!

[keithmerchant]

Excellent! I kept thinking that a .32 delta would reflect the 1SD, but its the both sides of the market concept that explains it. I thought it was related to two sides of the market, but wanted to verify it and probably went through 20 different links of articles and videos and this is the first one that CLEARLY explains it. Thank you!

[harrissimo]

This is one of the best explanation of IV I have seen...and I have seen a lot of them

[ryanurban]

I've watched several videos on SD now, and none of them have walked through a specific example of how to use it while picking strike prices on a stock. Does anyone know of one that does? I get the theory, but knowing how to apply it sure would be helpful.

[luvdriveni]

The Zep intro pepped me right up! I now ready to learn! Excellent!

[nevinkuser]

Very good presentation. IV is very clear now. 🙂

[SatishKumar-jbqm]

Wow! Clear and concise explanation. Thank you, Mike!

[tinsidious]

slightly confused about the relationships between IV, options price and vega.

IV is back-calculated from the market price of the option, taking into account the price of the underlying, DTE, dividends, risk-free return rate.
if the other factors remain relatively constant, and the price of the option increases due to increased demand of that option, that implies that the market anticipates greater volatility, and IV increases.
vega is the predicted increase in the price of the option given a 1% increase in IV. for positive vega, an increase in IV should cause the options price to increase.

am i wrong in thinking this is somewhat cyclical?

[Vijaxe]

best explaination you will ever find on this subject🙏

[dedicatedmotion]

Thanks for the explanation Mike!
I have a sample I took of 625 observations I took over a year ranging from $81.57 to $86.
The Mean I ended up with is: $83.84
If I do a Standard Deviation calculation in Excel the Standard Deviation I obtain is 1.32
To know the volatility; How do I convert that 1.32 to percentage?

[dannytetreault]

Were you a weather man in a different life? lol. Too perfect 👍🏽

[nicholasgarcia]

Very good explanation I didn't really know what implied volatility means

[surfsunsand]

It should not be called "Option Trading" but rather "Option Marketing" because for a short period of time you are marketing your account to 'buy' stock at a cheaper price or ask someone to 'buy' our stock at a higher price. Its playing keep away from the market price.

[Rpk]

Mike, is each occurrence an average of stock price in a time frame? When you say that the normal distribution is plotted with randomized 10000 occurrences...I’m wondering how the occurrences are extracted

[albyg.]

Hello, what about in Tastytrade when it says OTM = 100 % and IV = 5 % ?

[joshuasirleaf]

I have a question. Is the 2.5% ITM of the second standard deviation deep ITM?

[Financewithcarahuljadhav]

hey I am also youtuber in stock market, can i have your time fr conversation on how you setup system for shooting this videos

[stevenscott]

Please define exactly what the X and Y axes refer to in the diagram at the five minute mark titled standard deviation visualized. I think the X axis is the strike price and the Y axis is the percent chance that the option will expire in the money. Is that correct? Thanks!

[harshitagirdhar]

what do you mean by seeing one side of market ?