Implied volatility options

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When first starting out, many beginner option traders are somewhat bamboozled by the concept of option implied volatility.

If you find yourself in this position, then don’t worry, you’re certainly not alone – and this article is here to help rectify the situation.

One thing you absolutely cannot do is ignore volatility and put it in the “too hard” basket.

Of all the different aspects of trading options that you need to grasp, this one is themost crucial.

Understanding volatility is not only crucial, but also a fascinating part of trading.

With stocks, you can make money if the stock moves up or down; but options provide such amazing flexibility, you can profit in a multitude of different environments.

Of course, with that flexibility comes more risk.

Take for example, the trader who buys a call option thinking the stock is going to rise.

The next day his stock rises, but his call option falls in price.

I’ve coached hundreds of options traders, and almost all beginners struggle to understand how this can happen.

The answer is: that the volatility of that o

how is implied volatility determined

how do you calculate implied volatility