Implied Volatility: Does it Even Matter Anymore?
IBKR Podcasts
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The Importance of Implied Volatility
The model is assuming that you're trading volatility, not direction in the stock. So we could have an option that between now and expiration, it could actually end up being worthless at expiration. But if the volatility in between now and then was very high and you traded the model, it could have been a very profitable strategy. The sensitivity of an option price to a change in implied volatility increases as you go out further in time.
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