Re:The Trillion Dollar Equation [video]
by JumpCrisscross on Monday March 04, 2024 @01:29AM
(#39587603)
> options makers or writers or whatever might set a price based on what they feel is fair/good for them/whatever
Former options market maker. We basically made money because of (a) people setting prices based on gut feel and (b) retail investors buying options for leverage and then forgetting to exercise barely in-the-money contracts. The first has largely left the market; fortunately, the second came in with gale force.
> Robinhood buyers + supply/demand are what drives IV in reality
Of course. Supply and demand drive price. Volatility is a measure on price. Options are principally an instrument for trading volatility.
But... what really happens (in my opinion) is... options makers or writers or whatever might set a price based on what they feel is fair/good for them/whatever
Then a bunch of people on Robinhood make memes over it, hammer the bid, IV goes to 160%, voila...
Why does "spot" price matter in that equation? Robinhood buyers + supply/demand are what drives IV in reality I feel.