pricing

Discussion in 'Options' started by met1989, Aug 7, 2019.

  1. met1989

    met1989

    how do i know a butterfly im buying is a good price
    ?
     
  2. tommcginnis

    tommcginnis

    It's the same as for the Kia Sorento, KitchenAid blender, or Sunoco Ultimate high-test gas: research the product, research the market, research the current conditions.

    "Work."


    ("This is you being helpful, is that right?" Yes. Indeed. :cool:)
     
    Philo Judeaus, hmcp and rb7 like this.
  3. ffs1001

    ffs1001

  4. Amahrix

    Amahrix

    Part of it is making sure the short strike you're selling is expensive.
     
  5. Matt_ORATS

    Matt_ORATS Sponsor

    One way to check your price is to generate a smoothed market volatility (at ORATS we call this the SMV) skew and compare the theoretical values or implied volatilities of the market.
    In the picture below are the IVs and the SMV. You might compare the red square mid market IV to the SMV vol marked with an 'X' and a line through them.
    [​IMG]
    https://gyazo.com/03ac9fedcb39ac34e881108ceb0d0e51
     
    tommcginnis likes this.