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Opposites Attract: the Inverse Relationship Between Implied Volatility and Gamma

IBKR Podcasts

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Understanding Market Volatility and Options Pricing

This chapter explores how market volatility influences option pricing, highlighting the tendency for out-of-the-money options to become in-the-money as volatility rises. The discussion also covers the concept of fat tails, illustrating how extreme price movements are more likely during volatile conditions and their impact on price distributions.

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