For what ETF is the volatility risk premium especially large?

Discussion in 'Options' started by ajensen, Nov 9, 2022.

  1. ajensen

    ajensen

    Having looked at HYG options for years, it's my impression that the ratio of implied vol to historical vol tends to be especially high, perhaps because there aren't too many ways for retail traders to trade credit vol. Are there other ETF for which the IV/HV tends to be higher than for SPY? To test this you need historical daily implied vols. Some vendors I know of are IVolatility and OptionMetrics.
     
    stepandfetchit likes this.
  2. Interesting pursuit! My back of the napkin observations of a few tickers:
    Looking at prior 5 year daily data...
    Symbol avgRV avgIV %timeIV>RV
    HYG 6.62% 10.13% 89.24%
    SPY 17.61% 20.7% 73.23%
    TLT 14.3% 15.5% 67.59%
    TSLA 60.23% 68.61% 70.37%
    AAPL 30.25% 32.84% 65.45%
    QQQ 22.81% 25.26% 68.94%
    BOIL 92.82% 97.31% 62.51%
    UVXY 104% 133% 77.8%
    BABA 42.35% 44.7% 62.83%

    This obtained via TOS and a thinkscript I wrote
     
    Adam777, trade4succes and ajensen like this.
  3. Did you shift RV to be about 20 trading days after IV?
     
    stepandfetchit likes this.
  4. Ah! you are paying attention! Good eye. YES! See partial response below from my script info.

    # #hint:<b>Realized Future Volatility VS Implied Volatility:</b>\n Shift Anualized Historical Volatility to produce Realized Future Anualized Volatility for period X Bars corresponding to IV reference DTE calendar days.\nCompare this with the Implied Volatility \nTerminate the evauation on the right when future data required. \nDisplay the Average HV, Average IV, and average % of IV premium (value to result in match to Realized Future Volatility!\n
    # HVol: Historic (Statistical) Volatility
     
    tooriginal likes this.
  5. ajensen

    ajensen

    Thanks. I see Thinkorswim has good historical options data. It's part of TD Ameritrade, now owned by Schwab. I have a Schwab account, but I don't see such data on the Schwab site. The TD Ameritrade and Schwab platforms are supposed to be unified in 2023. For now it looks like I need need a TDA account to get the options data. Any other retail brokerages with good historical options data? I have an Interactive Brokers account.
     
  6. GoldDigger

    GoldDigger

    Have you tried researching on the iShares website?