RE:RE:No support Lol Frank, Over the past few months I have managed to learn enough math to be able to kind of understand the Black Scholes equation, right up there with Einstein, Maxwell, Navier, Stokes among the group of 17 equations said to have changed the world. Black won the Nobel prize for it. Scholes was dead so not eligable for the Nobel prize. The use of the equation led to an unprecedented growth of prosperity. Black Scholes is used to price derivatives like call & put options and to hedge against risk. One of the parameters used in the equation is "implied volatility".
From Investopedia: "In financial mathematics, the implied volatility (IV) of an option contract is that value of the volatility of the underlying instrument which, when input in an option pricing model (usually Black–Scholes), will return a theoretical value equal to the price of the option."
Anyway I'm still learning the linear algebra to try to understand implied volatility better. But I'm learning that when hedge funds, equity funds, institutional investors want to manage their risk expose they'll often buy a put option on some company that might be more exposed to macro factors like oil price, interest rates etc and hedge with a call option on a company that, under the same conditions, will outperform. Like they might short bte but go long on tve, meg, ath. They use the Black Scholes pricing model to do this.
I reckon that when I finally understand enough I'll follow the real tine data on CME Group or another data provider to be able to interpret better why the prices move the way that they do relative to each other based on the actions in the options markets. I've read that Trading View is also a good source of info. Is this true? Can you recommend one?