Or in other words, the George Box quote: "It has been said that "all models are wrong but some models are useful." In other words, any model is at best a useful fiction—there never was, or ever will be, an exactly normal distribution or an exact linear relationship. Nevertheless, enormous progress has been made by entertaining such fictions and using them as approximations."
Well said, but regarding Black scholes, the model is too flawed to be used for real time pricing. For example, black scholes model uses call prices to calculate put prices...this in an inherent work around which displays the shortcomings of the model. Implied volatility is calculated by taking the market price of the option, entering it into the Black-Scholes formula, and back-solving for the value of the volatility. Where is the actual IV% derived from then, if you have to back solve for it in the same calculation that it is required in to calculate option prices? Nobody knows
You need to give it a rest..You are clearly clueless,and you are a borderline troll...With all his assets tied up in a 2008 lambo.. You have showed us 1 documented trade of a 1 lot in CLSK,and the stock cratered 30 percent in your face while you doubled down. Now the stock is down 40 percent from its recent high,and you have suddenly stopped bragging about your 165% forecasted annual returns in the perfect world... Show us your formula for Black Scholes,put and call,and if its not "proprietary",your adjustments.. Did you actually ask where is IV% derived from??? Same place stock prices are derived from.... Supply and demand
What? I have been busy schooling you guys in other topics such as basic TA. I did show you the formula, and it clearly shows that otm call prices are inflated. IV is derived from unicorn farts basically. Also, as mentioned I trade in a world of more profits or less profits. The example you keep confusing is I didn't double down, I just didn't sell according to my plan, and it rebounded and expired worthless.
You didnt show the formula for puts..You dont know it OTM calls are inflated?? Not the puts??? So put call parity doesnt exist?? Dude,you are clueless And you are changing your story now.... Go back and read your posts... How is CLSK working out for you now?? 9 point s of heat on a 24 dollar stock?? Regardless,if you were a real trader,you would understand an instantaneous 30% down move in a stock where your are naked short vol is when you are forced to leave the sandbox without your toys... Unless you trade 1 lots
9 dollars is nothing...premium eats that up for lunch. I didn't do puts because I'm assuming its the same as calls...inflated otm. Calls and puts are entirely different entities. All this parity garbage is only because calls are needed to calculate puts...one of the major flaws in the calculations. Puts weren't even introduced until 1977. https://www.optiontradingpedia.com/history_of_options_trading.htm and then BS was added as a patch job.
Being wrong for 9 dollars is nothing on a 26 dollar stock??? So put call parity doesnt exist??? No skew necessary?? Yeah you assume,and thats your problem.. Why do you troll?
no puts and calls have nothing to do with each other OTHER than calls are used to calculate puts. That doesn't bother you? The skew will happen naturally anyway because (most) people are more afraid of losing money. This is the 1987 phenomenon or whatever. 9 dollars minus the premium. I think my break even is 18.55 so what am I down $600 if I close atm? Yawn. That's not even including the call premium I will collect. This is a massive drop too lol..how many SD? Not sure what the IV was before the drop but gotta be 2SD atleast. Theres the problem because how do you get IV after the fact? My data was telling me the price drop risk was $9.16 (14) so I nailed it.
LOL,I am more than happy with the current framework.... You dont understand risk,so you could never understand skew... Bother me??? Why should it?? It should bother you since options are mispriced by your quant model,yet you cant make a dime...
Btw I've also been busy trolling a Porsche forum because I keep spelling it Porche while inquiring about a possible new purchase.