Implied Volatility Explained (The ULTIMATE Guide)

[@projectfinance]

✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf

[@Eastbaypisces]

i dont understand how u get the calculation for it? like how d they come up with 68% probability and all?

[@garyvee1042]

I love the fact you specified that this is not get rich fast scheme. I don't know who needs to hear this ,you've got to stop saving money . invest some part of It,if you really want financial freedom. Invest in bitcoin, gold , buy stock, forex market, commodities, just invest and save yourself

[@andrewcartwright8455]

It's always for crypto investors to venue into trading because it is only by trading Cryptos investors can survive bearish periods.

[@mattewhuo8847]

My advice to anyone going into Crypto currency trading is to get yourself attached to a broker who will make good returns on investment.

[@itsjimmy7133]

I Will recommend mrs Jessica trading services to you, their strategies are working for me at the moment and I'm making good profits from bitcoin investment, She's available on what's app

[@itsjimmy7133]

*[phone]*

[@promise5343]

Wow you just mentioned and recommended mrs jessica , she has helped me too and I earned $10,000 in two weeks on bitcoin trading.

[@emmanuelnsoedo5505]

chris you are a great teacher and thank you.

[@bozzicone]

That was hard! :-) you're just great ..... I think I have to listen this video a lot of time 🙂 thank you.

[@Myopinion23]

Great video!!! Very in-depth

[@dvirhanum9530]

I like your explanation. Very professional, comprehensive and straight forward! How can we support?

[@jerrynix5206]

This is definitely a video I'll be watching several times, alot to take in wow. Thank you!

[@projectfinance]

It sure is! Lots of stuff here but don't worry about memorizing it all. The basic meaning/representation of IV is the most important part to understand. Thanks for the comment, Jerry! -Chris

[@mathlivernois1609]

@@projectfinance Why not use 252 instead of 365 to calculate a stock price range for a certain time period since we just have a 252 trading day

[@paysev6256]

Your content has insanely good quality. I am not getting why you only have 95k subs. Thank you for the work you put in!

[@YamahaC7SRG]

Great video! Thanks! Just saw it today and wanted to comment that people shouldn't stress too much if they don't follow the math of IV. IV is 'implied' because it is estimated assuming Black-Scholes is valid and working backward from actual trade data to calculate volatility from the B-S model. The problem for me is that I believe B-S is fatally flawed and IV is, thus, not very useful. As Nassim Taleb asserts, prof. traders use advanced rules of thumb that they learn over years of experience to trade options successfully. Newbies (and those adept at math) tend to treat the Greeks and such calculations as Gospel from Above and blindly rely on them for decisions without understanding what they're really doing and the severe failings of B-S. It is probably better not to worry much about a given IV calculation because the figure can be wildly wrong, right when you need it the most. Rather, study the CONCEPTS underlying options and the all Greeks and start out trading options very slowly by paper trading and then doing small, real trades to see how things work in the Real World. A successful mentor is invaluable.

[@robertocfaguiar]

I like your comment a lot. I have just started studying options and have just traded paper. I don't know all the math yet, but my feeling is exactly what you have said above. Would you be so kind as to recommend a book where the concepts are easily explained and make the case that, Greeks and IV, have to be seen in another dimension, in order to make a better choice when trading options? Thanks.

[@stephenglazer4224]

I have heard the same. I am no expert but from what I understand the IV is calculated by back solving for V in the B-S model by using actual option prices and SP moves. Many say that the B-S model itself is fatally flawed. In any case I recently bought a few Google Puts with two year expiry dates and a strike price of @135. Each cost $1710. I won't go into my full bear case for google but I do think the options are cheap. The same call option costs twice as much. The stock has traded as low as $88 already this year and its only a few dollars away from it's all time high. Even if there is just a 20 - 25% overall market drop in the next two years that will be more then enough to cover the trade.

[@me4901]

@@stephenglazer4224 B-S was written for European style options which can only be exercised at expiration. American style options can be exercised at any time. . So there's differences there. I haven't had enough experience to know exactly how much that difference matters, but it is worth knowing.

[@reyultra9247]

I am unclear on how to find the amount of days the implied volatility was below the current level.

[@chrisg4433]

There’s a 60% probability that I’ll be watching this vid a 100 times

[@xDeaconBluesx]

"60% of the time, it works every time." - Brian Fantana

[@TheNextNotch]

So I'm not the only one who will go back 30 seconds like 20 times until I understand??

[@juanignaciolopezmartinez6581]

1 question!! Is the stock or the option the one which has the implied volatility?

[@PaulJoseph]

Just take the square root of that 60% probability divided by the 100 times, ... and call it a day!

[@dhavalpatel3026]

@@juanignaciolopezmartinez6581 implied volatility comes from Option prices and not stock prices. Enter current Option price, days to expiry, stock price and stike price , RoI in Black Scholes Model and you get the Implied Volatility as an answer

[@2-InfinityNBYND]

Man, you’re awesome at explaining options. Thank you for these videos! 🙏

[@julioc4978]

The best video I have ever seen about Implied Volatility! Thank you! I now see why some people use the bollinger bands to trade and also why they work,

[@projectfinance]

Thanks for the comment/feedback! -Chris

[@Eastbaypisces]

what are bollinger bands?? i heard that before

[@RogueTrader31]

The expected range formula doesn’t make sense, as it mixes prices, which are log-normally distributed with IV, which is the SD of log returns, which are assumed to be normally distributed. The formula works only as a first order approximation. The formula as shown here overestimates down movements and underestimates up movements as it mixes normal and log-normal distributions. Let's say I have a $100 stock with a 1-year IV of 200%. If the expected move for one year is +/- $200, then the down move could be negative, which doesn't make sense.

[@ThePhinista]

Thank god I actually paid attention in that one stats class, makes this so much easier to follow.

[@lost70s]

I watched about 75% of the vid .. when I first heard you say .. you will be and expert .. I though ok more bullshit ... but still listened . I was impressed ... this was an excellent vid on IV .... when I saw that you showed TW platform I thought well this is a Tom Sosnoff production and I still wonder ... BUT you also figured out that IV Percentile is better than IV Rank ... again I was impressed . Most just fall to the ground to worship all that Tom Sonoff says and he is dead ass wrong that the IV Rank is better . And Dr. Data showed it in a vid but dare not tell the king he is wrong . I am a fan of Don Kaufman ( have listened to him for years on the Swimmlesson chat room in TOS and have copied many of his presentations from there ) and Don is sharp and does a good job explaining options and IV . For concise brevity with a lot of infor .... I think you beat him here . Not an easy task . Shame that you don't use the TOS platform as it is superior to TW for options and data and projection . In the past when people ask were can I go to learn options I most of time point them to Theo Trade - Tasty Trade some ... I'm going to point them to you here too . Hoping you do as good a job on the other subjects . IF >>> IF your other vids are as accurate and concise as this . You have got a killer program going here . I could not have done it better .. but that is not saying much . I must admit that in the back of my mind that I think you are produced by Tom Sosnoff ... but it's only a gut feeling and I can be very wrong . Thanks ........

[@projectfinance]

Thanks for the comment/support! I did work at TT a while back, but I have developed my own trading philosophy and way of explaining options. -Chris

[@Dougie1969]

Lost70s Sounds like you're no slouch on the options subject, you've clearly done your homework. I don't believe Chris is beholden to anyone though, I'm just saying, this guy has helped me a LOT. When I started off buying stock a couple years back , I'm ashamed to say I burned through 1000s.. Now I listen to people like Chris, I won't say I'm getting rich, but I can say I don't lose money anymore. I recently started using options, and love it, just definitely need to learn patience.

[@lost70s]

@@projectfinance LOL I think it 's the production format that made me think you were with him thanks LOL

[@Tpartee3]

Your channel is so professional and easy to comprehend the information. Thank you

[@tastysti]

The implied volatility of me understanding this video is high. Just subbed 🚀

[@NewVoiceSound]

I will do a push up every time he pronounces Implied volatility

[@bash5552]

Do a shot instead!!

[@jeffreymelendez]

Awesome video, Chris. I've learned more about IV in the 29 minutes and 50 seconds than I did in the last year studying IV.

[@projectfinance]

Amazing! That’s what I like to hear!

[@dynamic9679]

dude that's so dense.

[@marifhossain]

Blink man blink! You are giving me a goose bumps! :-)

[@vital4644_]

Dude this is good information. Wish i knew more!

[@stonathanjokes2142]

Constructive feedback. Sometimes I have trouble with the vids for use of terms that aren’t defined. In this video its straddle. I went to go look it up, but this was supposed to be an ULTIMATE guide :)

[@ConradCreel]

Old video so probably a worthless comment here but how often do you find stock prices to be Normally distributed? Or is this just a carryover assumption of Black-Scholes?

[@projectfinance]

They are not normally distributed so it's best to look at actual option prices/greeks as opposed to making back of the napkin calculations regarding expected moves. For example a call with a strike $10 above the stock could have a 0.16 delta and a put $20 below the stock could have a 0.16 delta, indicating more downside movement potential priced into the options (negative skew).

[@ConradCreel]

@@projectfinance that was my thinking. The comment was in reference to IV and the standard deviation in this video. E.g. within 1SD 68%, 2SD within 95%, etc.

[@trevorsvandrlik9104]

I've been watching options videos for 2 years, and just today I finally feel like I have an understanding of IV!!

[@projectfinance]

Yes! That was the goal of the video! I'm glad to hear it was helpful. -Chris

[@vakeesanmahalingam4078]

@@projectfinance great job on the video!!!... What I find confusing is the constant use of the term implied volatility throughout the video... I think you mention it in full like over 200 times... For future videos you should just say you'll be referring to implied volatility as IV and then explain it like you did... It would make it a lot easier to follow without constantly saying volatility every 2 seconds for 30 minutes Great video though!!! Tons of value!! Finally feel like I have a grasp on IV but I disagree with what you mention about IV and earnings. Many ppl profit trading based IV rank and IV during earnings, selling option strategies like iron condors.

[@PaulliMr]

Okay, watched it few times and I think I got it and all, BUT questions is, I'm looking to buy Option, there's an IV value there what does it tell me that option price don't?

[@rswatashi]

I really got a great information from your session. I'm going to work on analysis of stocks on Excel based the totally different observations from you. Thank you.. Btw, when you talk, your face looks like smiling always. It's a god's gift. God bless..

[@sahidycastillo5565]

Thank you for sharing your knowledge with us. It was very helpful for me since I just recently started option trading. Blessings

[@projectfinance]

You're welcome and thank you for watching/commenting!

[@bsdgffishtuna5186]

So when i hear traders "sell the vol (volatility)" - what does that mean in terms of an actual trade? shorting a stock? buying a stock? ie GME vol is off the chart - well now what strategy do I do to capitalize on that?

[@ImPipkinrick]

thanks for the video. there's other really popular options videos, from other creators, that explained IV by using IV in their definition. they say, "it's the volatility that's implied[...]" lol what the heck.

[@artiomkamincki]

Hi. Thank you very much for the video! Few people today provide information in such an accessible and understandable way! Cool! Can you please tell me where I can find a handy chart of implied volatility in the public domain? My broker unfortunately only provides average volatility...

[@lliang9838]

Another educational video, Chris! Thanks for the clear explanations. One concept that I am confused on is "How come those options that are expiring shortly after earnings report do not decay as they normally would?" Thank you for your time!

[@andis9076]

U mean earning on Friday morning?

[@me4901]

They aren't decaying because people are still expecting a big move on earnings day compared to a non earnings day. They believe if there's only one day to make a really big move, it could be done

[@fminc]

Thanks For your time Chris. This was very interesting and valuable.

[@routerpete1674]

Good video. So when I looking to long a stock for some immediate profits, how how do I predict the effects of a $1 move on the option price?? In other words, why wouldn't I always buy contracts that are just OTM and are cheaper than ATM contracts?

[@atomize]

Your explanations are so clear and perfectly devoid of any hype or conversational fluff - the generated Closed Captions are nearly perfect =) - Tip for other lazy viewers like me: Save the transcript for this video (and any where the articulation is so consistent) for some instant reference material that doesn't require re-watching the video 1000 times. Use the three dots by the bottom right corner of the video player and do "Open transcript". Boom, the notes you were never gonna take =)

[@projectfinance]

Thanks so much for watching/commenting!

[@markc5771]

Excellent idea!! Or if you're someone like me that remembers better from writing out the notes, definitely do that. I do that with all his vids

[@DBraun-uj8ir]

I'm new to options and will watch this again, but at the 2:42 minute point of your presentation you show a slide comparing Buying and Selling pressure to implied volatility. My question is this: Wouldn't a prior dramatic move DOWNWARD (selling pressure) also increase IV?

[@dubhsith5993]

So confusing. I've never seen a "stock" with an implied volatility. The option contract has an implied volatility. Where do you look up the stocks IV?

[@ST-wx6vw]

How exactly all platforms including ThinkOrSwim calculate IV as a single value for a given expiration cycle is a misty to me. For example, there are number of Call and Put options with different Strike Prices for a given expiration cycle (say AMD that is 25 days out from today). Each row of this 25 days out option chain (on each side Call/Put) has its own IV ...which can be calculated from option pricing formulas. I have calculated that in Python and it works (matches). However, from all these multiple IV values, how do they come up with a single IV value for the whole expiration cycle is unknown. It appears that they take some weighted average but I am looking for the exact calculation that would work for any stack (any expiration cycle). Any inputs on this will be greatly appreciated. Thanks....ST

[@jordanwrong2042]

Hey Project Option, could you also do a video on realized volatility? I feel like a lot of option investors forget about this! Thank you.

[@projectfinance]

Yeah for sure!

[@julesuk8295]

Great explanation, but, and I realise it's the subject, surely you could have cut down on the phrase "Implied Volatility" it's already implied (excuse the irony) in the word "it". Even "IV" would have made it easier to listen to. Hope that help perhaps with future videos.

[@jakedean278]

GREAT VIDEO! just a suggestion: it would have been better if your slowed down the pace of your speech. at x words per minute, and given the recondite nature of the complicated VIX, a slower speaking rate would be a great help to anyone that wants to learn what you are telling us.

[@MrCurtis61]

Hence , I understand why now , when you once said you don't use chatrs (T.A.) for trading it's all based upon mathematical probabilities. I think thats how Tom trades..

[@genehawkins7516]

This guy is good!

[@projectfinance]

Thank you!

[@figuredoutfitness8154]

If we check 7-10 days correlation of iv with stock closing price. Then instead of buying atm Options can we buy/sell that stock itself if iv and stock closing price have positive correlation, as before results we will buy say 10 days before results as iv will increase so the price will also coz of positive correlation

[@LemonSquueeze]

Thank you for this Video. I was just curious to how you got the 68% probability for the +or- 10.75 for the 250$ stoxk

[@otosonet6693]

When the IV is based on the option price, it is different for each expiration time and for each strike. So what does the IV above the option chain mean, ... the item that always gives the same number for all options on some underlying asset?

[@rswatashi]

Man, It went over my head after sometime.. too much for me to understand your nonstop articulation.. I need to go thru multiple times at .75 speed to understand your concept.. Definitely not easy to understand for a common investor. May be you can try making it easy..

[@bbwphantom]

All your videos are the best explanations I see anywhere. Everything is broken down and explained.

[@projectfinance]

Thank you so much! I appreciate it. -Chris

[@njperuviankid]

God bless brother. I just wanted it for the first time. Will def watch it at least two more times. Thank you

[@jasondillon2567]

Dang, this is such useful information, presented in a very understandable way. Thank you!

[@alariclau]

Good explanation!

[@doubleAbit]

Someone should count how many times he say “implied volatility” xD

[@projectfinance]

take a sip every time.... of water 😂

[@doubleAbit]

@@projectfinance do a push-up every time...this is how Dwayne Johnson became The Rock

[@doubleAbit]

@@projectfinance anyway nice channels! Hope to master options strategies soon thanks to it

[@CYQ776]

Sorry but I cannot find anywhere that posts every daily IV of a stock so that I can figure IVP. Where can I find the list or data set with all historic IVs?

[@waneframe]

Ok I'm probably more confused after watching this video 😉👍thanks!!

[@jimbala2967]

Hi how did you get 180 days? Show the formula how did you calculate? Thnx J.Bala

[@jeramykennedy6813]

i took a drink everytime he said implied volatility

[@projectfinance]

you're probably sloshed

[@mathlivernois1609]

Why not use 252 instead of 365 to calculate a stock price range for a certain time period since we just have a 252 trading day ?

[@jrr7031]

So.....the IV % of a strike price is the theoretical amount that strike price could move, up or down?

[@ioannislazaridis4887]

To the next video you must augment 5x the speed of your narration so everyone fully understands everything at once. Thanks.

[@shockerdcr]

Great video., but at 23:50 I’m guessing you meant to say 164 day not 180???

[@spacecat556]

I understood everything in the video, except for the last part of earnings Will have to rewatch it many times i think

[@skyred289]

Thanks Chris.. understood a lot from your explanation..

Oh best pimped out warm glowing light KZbin room on in the whole wide world good job you should also go into interior design for KZbinrs.

[@williambartmann5541]

Great video

[@shawndinh367]

Hey man hope this message finds you well and safe. Pertaining to using the standard deviation formula in order to calculate a stock's one year expected range, will you have to use the average price of that stock or its current stock price when inputting the data in the formula? Thank you and keep up the great work!

[@shadricosuave]

Good vid - but not easy to understand. Will need to watch again. Thanks for producing.

[@jakobafeworiki1006]

u realy are amazing u are the best teacher i have ever had i realy apprite u and all ur vids, and i realy hope u becoume even bigger then ur are and wish u all the best brother

[@shivkuma100]

How do you intrepret IV >= 100% as seen on some super volatile names. The 1SD range would then include zero on the lower end. To be sure, this tends to be in near term options... longer term options had IV of 70-80%... Also out of money options had higher IV approaching or exceeding 100%

[@theoreticalexercise]

Wow. Clearest explanation of IV Rank vs IV Percentile ever. Very concise. Thank you. I have changes to make

[@coldavenue2325]

Could you also make a teaching serries about the macro economic analysis of the market?

[@erikrowell5820]

You didn't actually tell me what implied volatility is..... :/

[@Masterofcreations]

Why is the yahoo option chain on IV is much higher than the option chain on IBKR? Don't get that part....

[@ivanov568]

I think there is a very high probability that he may have an inflammation in his pituitary gland.

[@GapBahnDirk]

This is such a good resource for options traders. Please continue with educational videos Chris!

[@projectfinance]

Thank you for the continued viewership! I don't plan on stopping.

[@gemini22581]

@@projectfinance you are touching our lives everyday with your knowledge and effort. Thank you so much for taking the time to do this. I have subscribed!

[@jakobafeworiki1006]

i have gain so much value from u thank u so much u realy are the best at ur profission

[@henishfrancis6058]

All your videos are very informative , appreciate your step by step teaching method and the tools that you use for that purposes. I appreciate all that you do and expect more videos from you in the near future. Thank you again!!!

[@beachthor1]

Ok this is more than I learned in my BBA degree.

[@charitymonae5608]

You’re incredible for sharing this knowledge! Thank you🙏🏾

[@achristianson4059]

Rank just casts a net… it’s on the trader to analyze its IV at a tighter range to assess closer

[@basildog007]

Outstanding material!

[@projectfinance]

Thank you! -Chris

[@JorgeRamos-xw6dy]

Where can one find implied volatility ? Thank you.

[@Ilyakurishko]

Great video! You are doing great job sharing this content!

[@250gto9]

Is there a way to watch the "volatility" of the implied volatility?

[@projectfinance]

You can watch the implied volatility of implied volatility. The VIX measures SPX option prices (which means the VIX is measuring the implied volatility of SPX). VVIX measures VIX option prices, which means VVIX is measuring the implied volatility of the VIX. Therefore, VVIX tracks the implied volatility of the implied volatility of the SPX index.

[@breezefor5966]

Chris you are the man👍🙏

[@projectfinance]

Thank you! I'm doing my best.

[@gnuPirate]

Great channel man. Sub.

[@projectfinance]

Thank you!

[@JoshuaLoganjoshuadlogan]

Played a drinking game to this: every time you said Implied Volatility, we drank. Two of my buddies died!

[@projectfinance]

😵☠️

[@guyredares]

Thank you. best option videos on KZbin by far

[@projectfinance]

I really appreciate your comment! -Chris

[@CYQ776]

Sorry I forgot to ask if a stock has an IV over 1.0 or 100% what is a better metric than the Expected Move Formula

[@CYQ776]

Note: Im am looking at Puts on risky companies with very poor fundamentals.

[@leejmuam1]

Great video. The more I learn the more I become confused 🤔🤔🤣

[@zbhalaji]

Spot on! thanks for the good work team. Chris has made a nice narration. Thanks.

[@P0l0boy7]

I’m not sure if you said it in this video or the other video about implied volatility. But, if IV represents the amount of extrinsic value that exists in a stock’s options relative to the time to expiration does that mean that as time passes IV decreases just like extrinsic value does?

[@projectfinance]

Not exactly. Basically if you keep IV constant and decrease time to expiration, you'll get a pretty straightforward option decay (but depends on if it's OTM or ITM and how much extrinsic the option has). I'll do a video on this! Great question!

[@ApurvParekh30]

I am kind of confused. If options prices are not dependent on the implied volatility, then what does Vega greek tells us?

[@projectfinance]

It's typically taught as "vega is how much the option price changes with a 1% change in IV." However, since buying/selling is what causes a change in price, I like to teach it as the option price change that will result in an estimated 1% change in IV. So if an option has a vega of 0.25, if I buy that option aggressively so its price increases $0.25, then its IV should increase by about 1%.

[@CarlosDuarte2007]

This video is gold!

[@projectfinance]

Thank you!

[@LeMuseHere]

This impled volitlity video on implied volitility is the best implied volitility, and most thorough implied volitility video on impied volitility I've yet seen on implied volitility.

[@leejmuam1]

🤣

[@dv8silencer]

Excellent video.

[@projectfinance]

Thank you very much!

[@embracevanity9871]

I was avoiding this video bc of its length but am so glad that I engaged. You are so incredibly good at explaining how things work in the simplest of ways. Thank you!

[@son_gokhan148]

How are u doin now

[@robertingersoll5289]

Re: @ 22.44 in your video. On TOS Trade Tab, for each option chain there is a figure for implied volatility and expected move in the top right corner. For example for GME today, the 19FEB21 chain, the number was 630.5%(+-929.6). I understand what that means but I am not sure HOW the 929.6 move is calculated from 630.5% IV. I will appreciate any comments or thoughts ??? What formula are they using. The formula in @22.44 gives way off result.

[@MrGlobalxD]

Can I have a download link for the presentation?

[@neuvocastezero1838]

Do a shot every time he says "implied volatility".

[@Ilyakurishko]

Is not it 1.65 standard deviation for 95%?