Hi All,
I am studying Price and IV relationship. I am studying PNB and trying to compare price with its IV. I read that, whenever price is high, IV will be low and vice versa.
General Trading setup:
Example: Oct-17, Jan-18, etc...
How is this possible? Is any of my above understanding or strategy wrong? Please help me to understand.
I am studying Price and IV relationship. I am studying PNB and trying to compare price with its IV. I read that, whenever price is high, IV will be low and vice versa.
General Trading setup:
- If Price is high and IV is low then CE and PE will be cheap. In such scenario buy PUT.
- If Price is low and IV is high then CE and PE will be expensive. In such scenario sell PUT.
Example: Oct-17, Jan-18, etc...
How is this possible? Is any of my above understanding or strategy wrong? Please help me to understand.