What is Implied Volatility in Options Trading?
Many options chains such as those at the best brokers for options trading provide the implied volatility for each contract. From the example above, if the volatility in WBA is 23.6%, we look back over the past 30 days and observe that the historical volatility is calculated to be 23.5%, which is a moderate level of volatility. If a trader compares this to the current implied volatility, the trader should become aware that there may or may not be an event that could affect the stock’s price. When traders buy or sell…
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