Why might a deep ITM call have a low implied volatility?

Quote from spindr0:

ONNNNNK! Not true. Wanna quit while you're behind? :)
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I don't want to quit ,I love to learn, I can use this site as a refrence book -.-. But yeah you can profit from deep itm contracts but I don't like paying high for a option contract. But I forgot everybody has different Trading Rules and Trading Theory. So that's where i'm wrong at. But hey whatever works best for you if you make money buying deep itm contracts go for it.
 
Quote from tomk96:

what product? the VIX is the only product that comes to mind with low vols on ITM calls.
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That's an illusion, caused by the fact that whoever you're getting your IV's from is no doubt using the cash vix as the underlying in its calculations, rather than the vix futures contract of the same expiration as the options (which would be correct).

There's a free video at http://masteroptions.com/?p=82 that explains it well.
 
Quote from dmo:

That's an illusion, caused by the fact that whoever you're getting your IV's from is no doubt using the cash vix as the underlying in its calculations, rather than the vix futures contract of the same expiration as the options (which would be correct).

There's a free video at http://masteroptions.com/?p=82 that explains it well.
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no, you are wrong. because higher VIX correlates with SPX puts, the skew is essentially inverse a normal index skew. ITM call, OTM puts have a lower vol than the OTM calls, ITM puts.
 
Quote from surfer25:

Nate, buddy... I hope options aren't your main trading vehicle.
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Lmao I'm Human just like you are we make mistakes. Even Professional Traders make the simplest mistake just because I was wrong on something that was simple by just checking my trading platform doesn't mean It's the end of the world for me.
 
Quote from NastyNate:

Lmao I'm Human just like you are we make mistakes. Even Professional Traders make the simplest mistake just because I was wrong on something that was simple by just checking my trading platform doesn't mean It's the end of the world for me.
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Don't get me wrong, I love your enthusiasm and you seem like a good guy. And you are absolutely correct, we all make mistakes frequently. I was just saying that I hope options are not your main trading vehicle based on what you wrote regarding them. Your answers indicate that you don't really understand the concepts you are discussing and I would rather see you learn more before risking too much on option trading.
 
Quote from NastyNate:

Lmao I'm Human just like you are we make mistakes. Even Professional Traders make the simplest mistake just because I was wrong on something that was simple by just checking my trading platform doesn't mean It's the end of the world for me.
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You should have a working understanding of synthetics and how to mark a fairval on every strike by solving for a call(put) price if you have the put(call) price and spot. You're at a disadvantage w/o the basics.
 
Quote from tomk96:

no, you are wrong. because higher VIX correlates with SPX puts, the skew is essentially inverse a normal index skew. ITM call, OTM puts have a lower vol than the OTM calls, ITM puts.
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too late to edit. the vix calls correlate with SPX puts, and vix puts correlate with SPX calls.


a friend that trades ags. has told me his skews are essentially the same at the vix. more premium to the calls.
 
Quote from atticus:

You should have a working understanding of synthetics and how to mark a fairval on every strike by solving for a call(put) price if you have the put(call) price and spot. You're at a disadvantage w/o the basics.
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^^this. pretty much day one of options basics.
 
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