DONT AGREE THE SKEW MAY DERIVE FROM BS WITH USE OF OPTION VALUE
ANYONE WAN TO DISCUSS WHATS THE USE OF LOCAL VOLATILITY FOR A TRADER? WHY COMPUTE LOCAL VOLATILITY WHEN U CAN GET IV FROM BS?
A FEW QUESTIONS ABT OPTION VOLATILITY
1) WHATS THE USE OF LOCAL VOLATILITY? THE COMPUTE PROCESS REQUIRES IV WHICH DERIVED FROM BS PRICE BUT IF U CAN DERIVE IV FROM BS U HAVE THE SKEW SO WHY BOTH WITH LOCAL VOLATILITY?
2) LOCAL VOLATILITY VARIES WITH MKT PRICE AND DTE BUT NOT TRUE COS THE...