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The Skinny On Options Math

What is the Implied Volatility Surface?

The Skinny On Options Math

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Implied Volatility is computed by inverting an option pricing model which depends only on given quantities, like the spot price and the risk-free rate; the details of the contract, such as the strike, time until expiration and put vs. call; and volatility. When you look at all of the Implied Volatilities of the strikes, this creates the Implied Volatility Surface.

Today, Tom Sosnoff and Tony Battista are joined by Jacob Perlman as he explains the Implied Volatility Surface and how you should use it. Jacob talks about how when looking at the surface, you should look for bubbles in the surface as this is where option prices and Implied Volatility will be higher!

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