On average, ETFs carry lower IVs than individual stocks, and therefore ETFs tend to be less risky to trade. This is due to most ETFs being heavily diversified by default. However, when placing a trade, the implied volatility is the final determinant of the asset’s risk: an ETF and stock that have the same IV both carry identical risk profiles at that point in time. Therefore, whether an underlying is a stock or ETF is irrelevant. The IV of the underlying is what determines the risk.
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