HV (Stat) vs IV Play

Discussion in 'Options' started by jdi, Sep 14, 2006.

  1. jdi


    Based on ur experience,Which one is better?. I tend to favour stat vol play.
    Relying on IV to go up or down in the long run probably is a losing game because ur positions profitability will be at the mercy of the options market maker.
  2. rosy2


    ur positions profitability will be at the mercy of the market.

    what's your "play" anyway?
  3. jdi


    Say Iron Condor, DN Straddle - Stat vol,
    Calendar, Diagonals - IV
  4. MTE


    "...at the mercy of the market maker..."? Since when do market makers control implied volatility?

    Implied volatility is the result of buying and selling pressures not market makers.
  5. jdi



    Good. Thanks. I'm still not sure about the option market micro structure.
    But are you sure IV is 100% function of the market B/S pressure. Don't market makers have some leeway in determining or quoting the IVs?

    My point is this: Statvol = function of(market of the underlying), while IV= function of(market of the underlying, market of the options, and market maker's leeway). hence, for the IV case, you are facing more unknown variables making you prone to more errors in betting which way the IV will go.