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Volatility Skews: Defined, Explained and Updated

Implied volatility is a key concept for covered call writers and put-sellers. It is a forecast of the underlying stock’s volatility as implied by option prices in the marketplace. In 2012, I published an article relating to implied volatility where volatility skew was discussed.    Volatility skew as defined in my 2012 article The volatility […]

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Implied volatility over different strikes

Volatility Skew- Understanding Option Premiums Over Different Time Frames and Strikes

In covered call writing, our option premiums are influenced by the volatility of the underlying security. Using the Black Scholes option pricing model, we can calculate the volatility of the underlying by entering the market prices for the options. Common sense would seem to dictate that for options with the same expiration date, we expect the implied volatility […]

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