The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be talking about the difference between volatility in stock prices versus volatility in option prices. Now, most people assume that when we talk about volatility that it has the same impact on stock prices as it does on option pricing, but it’s not the case. When we specifically refer to a stock or stock prices that are volatile, we’re talking about the underlying equity or ETF that we’re looking at and the price fluctuations that that ETF or equity is going through. If a stock is moving wildly, the price of the stock or the ETF is going up or down dramatically over the course of a trading period. That is what we refer to as the volatility of the actual stock itself. Now, when we talk about volatility of option pricing, we can similarly look at the volatility of the prices of options as they move, but what we’re really talking about is we’re really talking about how much implied volatility is bake