Day Trading & Forex Forum

kalkulon

hello again,
I have been reading through some interesting threads here. I liked cash C.O.W discussion where I got a feeling that recklessness will be punished. There was some advises there that stired an option trader in me and made me open some books on options. So here are some questions for experts:
Q1 Where one can get numbers for volatility (implied and real) for various timeframes. Is ib any good for this?
Q2 There are implied and real volatility. (implied is calculated through option pricing model - please correct if I am on a right track). They sometimes diverge/converge and I wonder how to use that divergence to enrich oneself when selling a put for instance?

tripleogstar

Q1) IMplied vol data may be difficult to get hold of (reliable and accurate data anyway), unless you can creat an option pricing model on excel and run the market prices through that to get implied vol.
For realised vol you can calculate that yourself, not difficult.

Q2) well if you think implied vol is way off the mean of realised vol in a particular time frame you can trade that volatility. So if you think implied vol will fall you want to be short vega and so short options.

kalkulon

tripleogstar,
thanks for your answer.
I am currently reading Lenny Jordans book on options and read Volatility part a few times already coz I am trying to quantify probabilities in my head.
I understood that if volatility is 20% for a product then it is for year. So if one wants to calculate volatility for 20 days then you have divided 20 by 12 to get to c 1.7% vol? And then how would you arrive at, say, 2 standard deviations from its current price within next 20 days?
If price now is 100 then 2% vol in next 20 days is 98 and 102 for 1 st dev?
Is this correct calculation?

tripleogstar

volatility is a 1 sd measure. the actual calculation is volatility/square root of time mulitplied by current price of underlying.

kalkulon

Thanks tripleogstar
I wanted to ask if my calculation was correct.

A Dashing Blade

where time = number of trading days NOT calander days