Implied Volatility

[GotherL]

Trying to understand IV a little better by giving an example.

Do you think the DEC 18 SAVA calls at $10 or $7.50 strike with a IV of 110% and 108% is low or high for this option?

 

[stepandfetchit]

Is this a hypothetical question; since the option B/A when the option market is closed has little if any reflection of the actual market? (the IV is likely derived from price inferred of the B/A). Perhaps if these was taken during trading hours, you may get meaningful responses. -- Observing the LevelII B/A size may be helpful, however since these are not really actionable after market hours, it should be taken with grain of salt.

 

[GotherL]

Is this a hypothetical question; since the option B/A when the option market is closed has little if any reflection of the actual market? (the IV is likely derived from price inferred of the B/A). Perhaps if these was taken during trading hours, you may get meaningful responses. -- Observing the LevelII B/A size may be helpful, however since these are not really actionable after market hours, it should be taken with grain of salt.

Yes, mostly hypothetical. I just wanna know how to identify a high or low IV on the related option chain.

 

[stepandfetchit]

If you gain trust in the IV provided by the broker, you may be able to gain some insight by looking the the skews. Here is the current skews for the 18DEC from TOS for reference. -- I am not suggesting this has much value, but it may provide another perspective. With time, you may find some of the information informative, but caution advised. I typically look at more liquid products and find any anomalies related to a single strike price very short lived, as HFT seems to evaporate pricing errors quickly. However, sometimes you may observe an uncommon convexity or concavity that can persist for a much longer time.