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Re:The Trillion Dollar Equation [video] by MuffinFlavored on Sunday March 03, 2024 @06:01PM (#39585332)
> If you do that, then its just - you give me iv and underlying, i give you spot.

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.

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.