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I would agree with you that we still have some disagreements, even you have now changed your statement about demand and supply of the underlying, rather than the volatility! :p I'm done with this thread! Bye! :)

Schap (The complete guide to spread trading, printed 2005, page 247): "This example underscores that implied volatility is simply the expected volatility that the option price quote implies and that it is not necessarily equal to historical volatility. The professional traders at the major...

McMillan (Options as a strategic investment, page 766): "If implied volatility increases, the call price would increase, and if the increase were great enough, might impact some time value premium to the put. Hence, an increase in implied volatility also may increase the price of a put...

Obviously you're a very experienced and knowledgeable trader/poster of options, who can explain something even beyond my comprehension! That's great!

You could be correct. But I think DMO originally mentioned only Demand, now he changed it to demand and supply, same as yours now. However, I still don't follow the point how supply and demand of volatility exists, as volatility (of prices) itself is either a statistical calculation or an...

I think you have found/ got a very solid backing on your claims (thanks to IB) with a very scientific manner, disregarding whether they are logical or reasonable or not.

1. Unsure whether DMO and you are talking about exactly the same explanation. Are you sure DMO talking about "IV IS just demand" is the same thing as your "everything is about equilibrium pricing"? As if IV is no different to evrything, the why do we need to use IV for options? Anyway I...

http://www.elitetrader.com/vb/showthread.php?s=&postid=2528592#post2528592 That's really great! I think you're going to re-write (aka re-invent) the foundation theory of options pricing! Thanks! :p

That's really great! I think you're going to re-write (aka re-invent) the foundation theory of options pricing! Thanks! :p http://www.elitetrader.com/vb/showthread.php?s=&postid=2528607#post2528607

Thank you for your love in replying my silly post before reading it carefully! :)

I am thinking to do a volatility analysis of volatilities (implied plus both the underlying and its options) in order to hedge not only delta but also gamma values. I haven't figured out whether I should later add further calculations about the delta implied volatility gamma of the vegas and...

Analysis of Historical and Implied Volatility of the S&P 100 and Nasdaq 100 Indices by Christina Chiu http://w4.stern.nyu.edu/emplibrary/Christina_Chiu_honors_2002.pdf Q The data presented in this analysis consistently indicate that, on average, implied volatility is higher than historic...

Who ’s afraid of volatility? Not anyone who wants a true edge in his or her trading , that’s for sure http://www.ivolatility.com/news/Putting_volatility_to_work.pdf Q The volatility to use is an individual’s choice. Some prefer to use short-term historical volatility while some...

A post about IV could be practically useful that I found on the optionnetics site written by its staff member: Q Hi there - Although IV does provide a market estimate for the expected volatility (non-directional movement) of the underlying, there are a couple of things to consider in...

That's an interesting comment! Thanks!

1. IV can be used not only for Volatility trading with options, but also for Directional trading using options. I think IV is much more important in Volatility trading particularly when doing short-term trades. However less important in Directional trading particularly when doing long-term...

Here are two posts I just found that could be of interest about the importance of IV in trading options. "Implied Volatility autocorrelation" http://www.elitetrader.com/vb/showthread.php?s=&threadid=133452

Are you saying you are simply not capable to write down any of your thoughts or feedback regarding this thread at all? Or you are just afraid to do so (besides promoting your stuffff)!:confused:

Have you ever got any doubts, questions and comments on the measurement, correlations and usefulness of IV (Implied Volatility)? An options trader can predict two things to make profits: (Forecast) Volatility of the underlying; and (Future) Volatility of its options. Practically, general...

No problem to me at all, Really. I Really don't like to admit the Real fact that I am a Real trader who always trades Really with Real simulation trades. Anyway, my Real thanks for your Really embarrassing me this time! :D