Implied Volatility Explained (The ULTIMATE Guide)

Рет қаралды 227,624

Күн бұрын

✅ 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
💰 Get up to $3,000 when you open and fund your first tastytrade brokerage account: geni.us/tastytrade
🔥 Learn data-driven options strategies: optionsforbeginners.teachable...
💻 Maximize your trading with TrendSpider's advanced charting tools and scanners: geni.us/trendspider
====
Implied volatility (IV) is a critically important options trading concept to understand. At first, implied volatility seems very complicated, but once you understand what it actually represents, it's very intuitive.
In this video, I break down the following topics and use examples to help you learn each concept:
1) What is Implied Volatility? What does it measure?
2) Implied Volatility vs. Historical Volatility (HV)
3) What IV means regarding the implied probabilities of future stock price movements.
4) Measuring IV with IV Rank and IV Percentile (and which is better?)
5) Calculating expected stock price moves over any time frame (expected move formula)
6) Implied volatility leading up to earnings reports (option buying opportunity?)
After this video, you should be very comfortable with what implied volatility means and represents, in addition to more advanced topics regarding IV.
Be sure to leave a comment down below with any questions you may have!
=== RECOMMENDED VIDEOS/RESOURCES ===
Implied Volatility Explained (Article): www.projectfinance.com/implie...
Options Trading For Beginners (PLAYLIST): • Become an Options Trad...
tastytrade Tutorials (PLAYLIST): • tastyworks Tutorials
Option Pricing EXPLAINED: • Option Prices EXPLAINE...
Options Trading 101: • Stock Options Trading ... tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Project Finance(Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade.

Пікірлер: 366

@projectfinance 2 жыл бұрын

✅ 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 Жыл бұрын

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

@paysev6256 4 жыл бұрын

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

@samuimuscle 3 жыл бұрын

This is not the first time I watch the VDO the more I watch plus observing the market in the brokerage platform the more I understand. Great job Chris!

@2-InfinityNBYND 4 жыл бұрын

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

@Tpartee3 3 жыл бұрын

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

@henishfrancis6058 4 жыл бұрын

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!!!

@embracevanity9871 3 жыл бұрын

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 Жыл бұрын

How are u doin now

@bbwphantom 5 жыл бұрын

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

@projectfinance 5 жыл бұрын

Thank you so much! I appreciate it. -Chris

@ThePhinista 3 жыл бұрын

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

@YamahaC7SRG 2 жыл бұрын

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 2 жыл бұрын

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 8 ай бұрын

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 7 ай бұрын

@@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.

@theoreticalexercise 3 жыл бұрын

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

@jerrynix5206 5 жыл бұрын

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

@projectfinance 5 жыл бұрын

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 3 жыл бұрын

@@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

@trevorsvandrlik9104 5 жыл бұрын

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

@projectfinance 5 жыл бұрын

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

@vakeesanmahalingam4078 4 жыл бұрын

@@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.

@tastysti5322 4 жыл бұрын

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

@julioc4978 5 жыл бұрын

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 5 жыл бұрын

Thanks for the comment/feedback! -Chris

@Eastbaypisces Жыл бұрын

what are bollinger bands?? i heard that before

@me4901 7 ай бұрын

I super appreciate this video. I was looking for a good explanation of implied volatility that includes the statistics side and this is great.

@fminc 3 жыл бұрын

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

@rswatashi 10 ай бұрын

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..

@njperuviankid 2 жыл бұрын

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

@zbhalaji 4 жыл бұрын

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

@LeMuseHere 3 жыл бұрын

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 3 жыл бұрын

🤣

@padmansundar3425 3 жыл бұрын

IV explained very well with good examples! helped in practical application which most videos on this subject do not do! Thanks a lot!

@OtRatsaphong 3 жыл бұрын

Very informative video, Chris, but one that i'll have to step through carefully to fully understand how to use IV Percentile with my options trading strategies.

@jakobafeworiki1006 Жыл бұрын

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

@emmanuelnsoedo5505 3 жыл бұрын

chris you are a great teacher and thank you.

@ecast1500 2 жыл бұрын

I saw this video but did not watch until now, 10.09.21. It shed a bit of light on what I was actually seeing. I was following F (ford) when it was trading between 14.00 and 15.00. The options for calls and puts were low for a stock at that price. I looked at other stocks at that price and the option prices were way higher. This video gave me an idea on why. Ford was trading in a range for a long time. Now the trick is to find out what to do with this knowledge, good luck to all

@Myopinion23 2 жыл бұрын

Great video!!! Very in-depth

@sudhirpatil3434 2 жыл бұрын

It is complex sub to understand - i will have to watch a few more times just to make myself understand.... Thx for your genuine efforts!

@guyredares 5 жыл бұрын

Thank you. best option videos on KZfaq by far

@projectfinance 5 жыл бұрын

I really appreciate your comment! -Chris

@GapBahnDirk 5 жыл бұрын

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

@projectfinance 5 жыл бұрын

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

@gemini22581 4 жыл бұрын

@@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!

@jasondillon2567 Жыл бұрын

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

@colybwoy 2 жыл бұрын

Great video, this is a wonderful resource to archive and return to for a refresh.

@bozzicone 2 жыл бұрын

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

@monsheet 3 жыл бұрын

This video is such an eye opener. Awesome, Buddy!!

@vital4644_ Ай бұрын

Dude this is good information. Wish i knew more!

@jakobafeworiki1006 Жыл бұрын

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

@bobbydejesus5987 4 жыл бұрын

Hey Chris, thanks for all you do for us!! You are the best I've seen at teaching this stuff. A true godsend my friend! Question. To calculate IVP, how do I find the number of trading days a stock has been under it's current IV? My bad if this is a silly question. Really new at all of this.

@youngb.wiseman3576 4 жыл бұрын

Another great video my man. Going to watch again like I do most of your videos. So much to learn! 😁

@projectfinance 4 жыл бұрын

I appreciate that! Thanks for watching and commenting. Let me know if you have any questions!

@skyred289 2 жыл бұрын

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

@lapogk1543 4 жыл бұрын

Thanks. one of the best explanations.

@FRANKWHITE1996 3 жыл бұрын

That is one huge portion of something i was lookig for! Subcribed ;)

@lliang9838 4 жыл бұрын

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 2 жыл бұрын

U mean earning on Friday morning?

@me4901 7 ай бұрын

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

@warrengedye2888 2 жыл бұрын

Very very very good explanation!!

@jalanubha 2 жыл бұрын

Best Video on IV!! Thank you

@bernardshaw6905 3 жыл бұрын

Outstanding video. Great help, thank you.

@Ilyakurishko 2 жыл бұрын

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

@TheRealStevenAdams 3 жыл бұрын

Great job explaining IV! Thanks.

@MaxxerG 2 жыл бұрын

I’m binging all of Chris videos

@jeffreymelendez 4 жыл бұрын

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 4 жыл бұрын

Amazing! That’s what I like to hear!

@dynamic9679 2 жыл бұрын

dude that's so dense.

@davidtewelde2606 4 жыл бұрын

simply the best.very easy to understand

@artempazukhin4246 2 жыл бұрын

thank you for this video!

@absolutebosscollective8202 3 жыл бұрын

Thanks for the formulas!

@kingdrew5083 3 жыл бұрын

This is great explanation video.

@alariclau 2 жыл бұрын

Good explanation!

@premierinvestments5771 3 жыл бұрын

-great info Chris, thankyou!

@spacecat556 Жыл бұрын

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

@cottondai 5 жыл бұрын

Great video. Thank you for your lesson.

@projectfinance 5 жыл бұрын

You're welcome and thank you for the nice comment! -Chris

@CWLong 3 жыл бұрын

Another wonderful explanation.. and nice lounge music to end with.

@prabhakarpotu6617 3 жыл бұрын

Excellent and very good lecture

@atomize 4 жыл бұрын

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 4 жыл бұрын

Thanks so much for watching/commenting!

@markc5771 Жыл бұрын

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

@ursulamadrid4006 2 жыл бұрын

execellent explanation!

@basildog007 5 жыл бұрын

Outstanding material!

@projectfinance 5 жыл бұрын

Thank you! -Chris

@sahidycastillo5565 5 жыл бұрын

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

@projectfinance 5 жыл бұрын

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

@jaredbolotte9211 2 жыл бұрын

great explanation

@dineshkukreja4964 4 жыл бұрын

You're brilliant teacher. Keep up the good work.

@projectfinance 4 жыл бұрын

Thank you! 😃

@dougsmith9779 4 жыл бұрын

good info and well delivered tks

@projectfinance 4 жыл бұрын

Thank you, Doug!

@DTsoumpas 3 жыл бұрын

Thank you for an amazing video, I am wondering if you have any recommendations for options data? (Having historical implied volatility numbers would be useful for conducting analysis)

@gwentchamp8720 4 жыл бұрын

Awesome video ! Trying to watch as many of your awesome videos as I can !

@projectfinance 4 жыл бұрын

Thanks for watching/commenting! I am glad you're liking the videos.

@narindersingh6980 3 жыл бұрын

Thank YOU

@kiranpandit3635 2 жыл бұрын

Thank you

@epagliu 3 жыл бұрын

Perfect video!

@nichen6966 4 жыл бұрын

Thank you. Fantastic explanations of IV concepts in a practical understandable way.

@projectfinance 4 жыл бұрын

Thanks for watching and I'm glad you found it helpful. It's a tough concept at first, but after some thought it becomes more intuitive.

@nichen6966 4 жыл бұрын

projectoption Yes, as others have mentioned, will come back to refresh my understanding further. Thanks.

@shawndinh367 4 жыл бұрын

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!

@tjjeannette 3 жыл бұрын

Thanks Chris!

@lusmas99 2 жыл бұрын

Great video.

@shadricosuave 3 жыл бұрын

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

@williambartmann5541 3 жыл бұрын

Great video

@rahsta106 5 жыл бұрын

Good stuff. Im looking to take your VIX course.

@breezefor5966 5 жыл бұрын

Chris you are the man👍🙏

@projectfinance 5 жыл бұрын

Thank you! I'm doing my best.

@noahintara6619 4 жыл бұрын

Great job, Braddah. Thanks.

@projectfinance 4 жыл бұрын

Of course. thanks for watching!

@NandeepPatilvlogs 6 ай бұрын

Thanks

@projectfinance 6 ай бұрын

You’re welcome thanks for watching!

@prabhakarpotu6617 3 жыл бұрын

exdcellent and very well explained

@dvirhanum9530 3 жыл бұрын

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

@marifhossain 3 жыл бұрын

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

@alvinstephensii844 4 жыл бұрын

I find your videos highly informative. The best in KZfaq. Question. As you sit down each evening/morning, what procedures do you go through to determine what options you are going to invest in the following day as there are 1,000’s to chose from.

@projectfinance 4 жыл бұрын

I don't. I'm not a trader like that. I don't trade every day. Sometimes I only trade a few times a month. I have a watch list of stocks that I watch and mostly do things in those stocks, or the overall market index (S&P 500).

@YI-ul1oi 4 жыл бұрын

great lesson. thanks so much.

@projectfinance 4 жыл бұрын

You got it! Thanks for watching.

@routerpete1674 4 жыл бұрын

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?

@petergilson4861 4 жыл бұрын

Really great vid; for the first time I start to have the very beginning of the feeling of getting a grip on IV...... LOL Thanks for this!! Unfortunately my TWS doesn't support IV ranking nor IV percentile... Is there a free site offering this info or a good place to find these figures? As I am not a US citizen I can't open an account here so I'm stuck with the knowledge but not able to use it....

@mintushah1 4 жыл бұрын

hi, GR8 Video on IV .can you explain on the Day of the earning if the underlying price decrease what would be the effect on optional price?

@rohitindurkar 4 жыл бұрын

You are doing Great job . Thank you.

@projectfinance 4 жыл бұрын

You're welcome and thank you for the comment!

@jordanwrong2042 4 жыл бұрын

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 4 жыл бұрын

Yeah for sure!

@growgreencapital4484 3 жыл бұрын

You r awesome brother! Thank u ❤

@admiralknnight5779 4 жыл бұрын

EXTREMELY WELL EXPLAINED TOPIC OF IMPLIED VOLATILITY. I HAVE 2 QUERIES FOR YOU IF YOU COULD CLARIFY, PLEASE...1) DO YOU HAVE A METHOD OR CAN YOU SUGGEST A METHOD TO GET TO THE FORMULA TO CALCULATE THE IV PERCENTILE, VIZ. THE NUMBER OF DAYS FOR THE NUMERATOR THAT THE IV WAS BELOW THE CURRENT IV. 2) EXPECTED PRICE MOVE FORMULA... ARE BOTH OF THESE AVAILABLE ON ANY PLATFORM OR DOES ONE NEED TO CALCULATE THIS EVERY TIME? WOULD REALLY APPRECIATE THIS, CHRIS....

@jolly8324 2 ай бұрын

Genius!

@vivekjoshi7798 4 жыл бұрын

outstanding clarity

@projectfinance 4 жыл бұрын

Thank you for watching!

@cansly92 2 жыл бұрын

Very Good Video Very Clear How do you plot historical IV, rank & percentile over time? Is it possible to plot premium VS stock price over time for a fixed strike price? Thanks

@rafiqphy 4 жыл бұрын

Awesome explanation !

@projectfinance 4 жыл бұрын

Glad you liked it!

@cyberjet2 3 жыл бұрын

that was nicely explained, what I don't understand if the 1SD is higher and we expect bigger move with high IV why people always say at high IVR you sell premiums and buy them at low rank ?

@losbeonit8865 4 жыл бұрын

My question is how do u know what’s a good percentage for an implied volatility on a high liquidity stock vs a low liquidity stock ?, because what might be high for one might be low for another. 50% or below???