Bear trade - options implied volitility will pick up faster than with a Bull trade?

Discussion in 'Options' started by easymon1, Jan 25, 2020.

  1. easymon1

    easymon1

    Noob question.
    Nison states that "...if you get a good bear trade - with options in many instances, implied volitility will pick up faster than it would with a bull trade."
    Is this true?

     
  2. ajacobson

    ajacobson

    Yes, it generally true. Why - think of volatility as the "cost of getting a hedge done" and it becomes more difficult in down markets. You'll see a lot of answers relating to percentage move as a reason - and that does contribute, but the core reason is implied volatility can be thought of as the "implied" costs to achieve a delta hedge. Volatility can also go up on a rally if it occurs abruptly.