Registered: Mar 2007
06-05-12 10:38 PM
Quote from Rodney King:
> I stated since options have traded.
And I stated since FB has been public. So we've provided OP with two factoids.
> What is "true" vol?
Unobservable -- the point is, we have no basis on which to estimate it. BTW what's "stat vol"?
> Why trade a vol bet if the data, by your admission, isn't meaningful?
OP wants to trade FB options, not I. What am I "admitting"?
You implied that IV at 60% was low, or at least not overpriced. IV in weeklies hit 70+ today and the June monthly is 68-70%.
It's analogous to you stating that you cannot see the future and therefore there is nothing meaningful to say about it(the future). Obviously trading is a bet on an future outcome. IV is the market's determination of a fwd fair-value figure on realized vol to those expiration dates. I consider the ATM IV and term-structure the best predictor of realized vol, yet I am still shorting 70-vol.
Stat vol = statistical vol = realized vol. It's more efficient short-hand.