Dr. Benn Eifert - Bad Ideas (S3E3)
Flirting with Models
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How Do You Measure Implied Volatility?
One of the things that I often hear when talking to folks who use options frequently is the implied sort of cheapness or expensiveness of a given option. How are you thinking about measuring that cheapness? You can look at take your example of a $50 stock and this question of $70 is that a you know maybe I want to sell the stock there. The options market tells you what the implied probability of the stock getting to $70 over any time horizon is.
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