Implied volatility | Finance & Capital Markets | Khan Academy

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[@wenzhaowei6008]

Believe it or not, your explanations are 100 times more explicit than my professors. Thank you !!!

[@akhileshverma1629]

in thumbnail it shows "implied colatility"

[@mikediscipleofJesusChrist]

finally I am done with macro-economics, micro economics, and finance.... 440+ videos in 6 months....

[@diversified170]

is it worth to take ?

[@JoshuaNgMusic]

How does that materially impact your life?

[@LaFacedera]

How can you process so much information in 6 months lol After 3 years I'm still studying micro, macro, finance and econometrics.

[@poisonpotato1]

Isnt that self referring. The market is paying that C because the formula told them to price it at that C.

[@tigeruppercut7]

Can you make a video on options pricing models? For example, using binomial models. You can't do American options and dividend options as accurately with black scholes. You can also simulate the implied volatility with models.

[@thomasscoville1148]

this is awesome. Skilled communicator. So scarce on KZbin. Thank you!!

[@khanta7769]

He keeps saying if I have these 6 inputs, but there are only 5 inputs to derive the 6th value. The 5 inputs are Stock px, Strike px, Time, Risk Free Rate, Volatility, the output is Options px.

[@souravkamilya3129]

Your videos are realy helping people understand the fundamentals of Finance ..Thanks!!

[@solsolomon]

Thank you. Finally a good explanation of how this number is calculated.

[@ForestFolk_]

Great explanation, thanks

[@bipra7682]

The only channel that never disappoints

[@M4rtingale]

Yes, the variables d1 and d2 are derived from the geometric Brownian motion which is lognormally distributed.

[@DannyJaraMusic]

I’ve been looking exactly for this and you explained it neatly, thanks 👍🏼

[@vicentecfn]

Great video.

[@vincentiPad]

excellent video brother. finally understand how they calculate IV!!! I love you!

[@-ADK-]

This vid was helpful going to attempt the code

[@HKHasty]

Isn't the logic of calculating volatility from B.S. formula circular? Options traders will make an assumption about volatility. An option's price is calculated accordingly. Then stock traders will use the option price to back-calculate volatility.

[@jm7476]

Hi everyone, can someone ask this important question ,please ?: If you buy a call/put option that only has intrinsic value, then you can almost forget about Theta an IV because the option price movement will not be affected by them? is that right? : Theta and IV only applies to the extrinic value part and not to the intrinsic value part of the price of the option? Else, if you buy a call/put option with both intrinsic and extrinsic value, but, the amount of intrinsic value is bigger than the extrinsic value , you can only lose money if your option ends OTM?I mean, even if end up losing all the extrinsic value, because your option ends ITM (you get right the direction of the stock movement) , still has intrinsic value (and bigger than the one it had when you bought it) You can only lose (because of theta and IV) the extrinsic value part , not more than that? Thanks in advance

[@Ran-bb3lk]

Please Please continue!!!!!!!!

[@johnjacobs6234]

Is there any way to estimate volatility, then run it through Black Sholes to get the real value of the option?

[@TheChawamushi]

To put it in very raw term, can we say that what IV is, is actually the premium which markets pay for the option. This is derive by getting the market price of the option and minus the knowns (Stock Price, exercise and etc). By doing so, we also will be able to figure out if market is paying more or less for a given assumption on volatility (assuming we have one). And basically we are trading the premium of the option? Suppose everything else stays constant.

[@TheSwagKING111]

This helps so much. It makes everything so much easier.

[@lennyb.9616]

thank you so much, that was very clear and usefull

[@enteradj]

People trade options on implied volatility, does that mean that implied volatility would have its own implied volatility?

[@guillermoguijarrorodriguez252]

thank you very much, your videos are really usefull

[@amanlalshrestha4204]

I love you Khan Academy!

[@Wielorybkek]

Finally I understood this concept! Thanks!

[@SH-of2wp]

I have a doubt,What about the call option price in case of OTC . Here we don't know how much price call option is trading in the market....do we need to match with similar options on exchange?? Else we have two variables and can't solve for implied volatility.

[@HelterMcSkelter]

0:21 I know this is pedantic, but... you only listed 5 things, mate. :D

[@thegodpill9696]

I can identify the consistency everyone is missing, the stock price change in % and consistent time to expiration, and consistent back log the equally change in % to strike price will be worth the same amount every time.

[@quantstyle6448]

NOTE: The market does not say the correct price. The price comes from the exchange of money between investors. The market price is a reflection of the exchange of money between investors--the Ponzi process.

[@davidsweeney111]

Can we discuss the Greeks please?

[@StillStealSteel]

mind blown!

[@LiamForster-x5k]

I know all the parameters except for the implied volatility and the price of the call option, is it still possible to use the Black-Scholes model to determine the value of the implied volatility?

[@hellotrading3245]

What actions we can take based on greeks values ? Are there any channels that share that ?

[@SH-of2wp]

I have a doubt,What about the call option price in case of OTC . Here we don't know how much price call option is trading in the market....do we need to match with similar options on exchange?? Else we have two variables and can't solve for implied volatility.

[@vaibhavvatkar]

Can you tell what is delta neutral strategy?

[@Gogargoat]

Doesn't black scholes assume normally distributed log returns?

[@klaasklapsigaar]

Nice vid, maybe you can do a video about the Heston-model and also about changing risk-neutral and real-market probabilities.

[@nononnomonohjghdgdshrsrhsjgd]

Hi, thank you for the explanation! Can you show why d1 is the conditional probability of how deep in the money the europ. call is? I mean, in the form of standardized Z-value of normal distribution, derived from a lognormal (in the usual form of x minus mean/stand. dev.).

[@Hebatjodi]

Thanks

[@dineshagarwal5555]

Sir can u please solve a complete question on black Scholes model... Or can anyone tell me here that how N(d1) = N(. 50327) =.6928?

[@lakshmanmohanlanka9334]

Normal distribution formula, integration -inf to x e power -t^2/2 dt.

[@amanlalshrestha4204]

amazing amazing video !!!👏

[@alijalloul122]

11 years later, the thumbnail title is still implied colatility

[@mikejewell8518]

12 years later and I still watch Khan Academy videos

[@benjaminkaarst]

Nive cideo!

[@Sofi8007]

I have here exercise that says"get closer to the implied volatility by using the two steps of the secant method" ..... how do you start with that?

[@Ivan-fp9lq]

What is risk free interest rate ?

[@mikejewell8518]

Just think of it as the interests rate on an U.S. Treasury Bill/Bond/Note. It's risk free in the since that there is basically no chance of you not getting that specified return on your investment. Technically there are no risk free interest rate investments but T-bills are the closest example

[@aniketalinge461]

Is exercise price means amount of premium paid??

[@simcityz]

Strike price and exercise price have both the same meaning it is the fixed price or amount of cash that you pay to counterparty as a call option holder in exchange for receiving the stock from the counterparty if you decide to exercise the option. If you are put option holder then exercise price guarantees the amount of cash you receive from counterparty in exchange for giving your stock to counterparty if you decide to exercise the option. Premium is the price that you must pay intially to counterparty in order to receive this insurance and right but not obligation to exercise the option if it is beneficial to you. Thus, the premium is the price of creating the contract (option) between insurance buyer (option holder) and insurance seller (option writer) and it is paid from buyer to seller. It is easier to understand it when you think about normal insurance company that collects payments (premium) from you intially in order to establish the insurance contract between you and the company. Then you receive the insurance that protects you from unfortunate events. The insurance company is obligated to fullfill their side of contract e.g. recovering certain amount of costs related to damages. However, if you do not need/use the insurance then the insurance company keeps your initial payment (premium) as a profit. Similar logic applies to derivatives markets and options with some practical differences of course.

[@georgeofhamilton]

The thumbnail says "Implied colatility."

[@apigtooter5727]

6 inputs or 5?

[@tiago_holanda]

In the video's tumb its written 'Colatility', with C, LOL

[@Dortolevi]

more i want more to learn

[@Lauderdalesfinest954754]

Sounds Like Futures..

[@JC-qq9sw]

IV crush

[@octam5409]

Bro this video has been up for 11 years and the thumbnail is still misspelled ….do you even care ??

[@ColocasiaCorm]

colatility

[@stephaton1835]

These five things... learn how to count...

[@julienraffaud5110]

he says everything twice??

[@millenialmusings8451]

Ones off there main reasons I don't watch Khan academy videos is because the speaker sal Khan repeats every sentence 2-3 times. Is really irritating to listen. No wonder his videos have such a low likes to views ratio

[@johnpalma7265]

I realize this is an old(er) video but i'd still like to know:Where is TRUMP in all of this?

[@TheRealMartin]

What does Trump have anything to do with Black Scholes and option pricing? If anything, Volatility hasn't increased and is still at record lows.