IV and long call options

[destriero]

W

What is share-vol? Do you mean the iv/volatility of the actual equity vs the volatility of the different expiries?

Annualized vol of the underlying shares, not the options.

 

[believezz]

options of diff strikes behave completely different ie DITM call is like holdin a deltaone whereas otm calls need spectacular upside moves to beat theta decay.

All your questions will be answered once you forget the actual options and just look at the Greeks.

 

[ironchef]

I think I figured out why a person can be right on direction but still be wrong when they exit the trade on a call option. I believe this is because of how iv behaves in the option pricing formula.

Is going long call options with a long/upward directional bias a fool's gambit? Implied volatility typically goes up when a stock drops, and goes down when a stock goes up. For call options, doesn't this mean the IV value of the call is decreasing as the stock goes up? Therefore, you can right on direction but still be wrong on the your exit price... This has happened to me before.

Or does an uptrend trend for a call option increase the IV value of the call option? Ie IV working in reverse as a put option. I don't think this is the case but wanted get the experts opinions here...

Thanks

Perhaps give yourself a little more time.

 

[jeffalvinson]

I think I figured out why a person can be right on direction but still be wrong when they exit the trade on a call option. I believe this is because of how iv behaves in the option pricing formula.

Is going long call options with a long/upward directional bias a fool's gambit? Implied volatility typically goes up when a stock drops, and goes down when a stock goes up. For call options, doesn't this mean the IV value of the call is decreasing as the stock goes up? Therefore, you can right on direction but still be wrong on the your exit price... This has happened to me before.

Or does an uptrend trend for a call option increase the IV value of the call option? Ie IV working in reverse as a put option. I don't think this is the case but wanted get the experts opinions here...

Thanks

You can learn how the variables change an option's value by simply using the C.B.O.E. Option Calculator below. Enter your stock or ETF symbol in the yellow vertical band and click go.
Then change the variables on the lower left side for stock price, strike price, expiration date,
and volatility. After each change click the blue Calculate button in the middle and you can see how each change effects the call or put price value.


http://www.cboe.com/framed/IVolfram...ADING_TOOLS&title=CBOE - IVolatility Services

 

[Abundance Magnet]

You can learn how the variables change an option's value by simply using the C.B.O.E. Option Calculator below. Enter your stock or ETF symbol in the yellow vertical band and click go.
Then change the variables on the lower left side for stock price, strike price, expiration date,
and volatility. After each change click the blue Calculate button in the middle and you can see how each change effects the call or put price value.


http://www.cboe.com/framed/IVolframed.aspx?content=https://cboe.ivolatility.com/calc/index.j?contract=99BC2F89-18EF-431E-A9C3-65E5A1721153&sectionName=SEC_TRADING_TOOLS&title=CBOE - IVolatility Services

Thanks! Much appreciated