Why are auction market prices based on volatility?

[TradeCat]

There are debit/credit transactions that occur in the present based on an assumption about the future. How do those affect the current market in relation to the IV (and create opportunity)?

Looking for the simple answer here, not for ease but rather lack of brain power :/

FS

You appear dazed and confused. Don't buy a single Option or Futures contract. You will lose money. Run now.

 

[freedomshark]

You appear to have or have had multiple aliases. Chances are you are the one hurting here. LOL

 

[freedomshark]

More specifically, option pricing, but volatility creates an agreed upon range be it historical or implied.

In general, auction markets are based on volatility as a means to efficiently match buyers and sellers. Previous highs and lows created the historical market. The bid ask creates the current market. Implied volatility creates a future market.

The trader, more specifically it's frame of reference, is the only independent variable. The market's frame of reference does not change, it 'rolls'.

FS