Discussion in 'Options' started by flyingforget, Oct 15, 2008.
any lineral relationship between them? on the expire day ,Will V be equal to HV?
Think of it this way, HV is the actual, real, historical volatility of the underlying security as measured over 20 days, 30 days or whatever.
IV is what the volatility is implied to be, based on the particular option's price. IV is often thought of to be "what the market is predicting" the volatility to be. Such as, the price of options go way up on a stock right before earnings. This means the IV has increased, but the HV has not (yet).
From what I've seen over the years, IV tends to trend the same, over time, as HV. But the two are usually different and lots of times VERY different.
Also, there is no volatility component at expiration. There is only intrinsinc value (if ITM).
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