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1

As per the Black-Scholes model, the value of a call option is directly proportional to the volatility. Without getting into the derivation of the BS equation, is it possible to intuitively understand why this is so? No, you cannot disregard the BS equation and intuitively understand why the value of a call option is directly proportional to the volatility. ...


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Implied Volatility represents the actual above-market premium an option contract trades for at any point in time, but it changes in mysterious ways. Implied volatility is not "the actual above-market premium an option contract". In non technical terms, implied volatility is a reflection of current price. If it is higher than historical values ...


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You are missing a very important detail about leverage. Leverage requires you not just to get the direction right but also the timing. Let's try some math: Some asset goes down 10% one week then up 12% the next week. You have no leverage. You invested $1,000. You went down to $900 then up to $1,008. You made 0.8% in two weeks. Not too shabby. You do the ...


4

You appear to be severely underestimating the risk associated with (a) investing with leverage; and (b) shorting stock. As well, you defend your actions by saying you 'agreed with the specialists', but keep in mind that there is never unanimous agreement over what will happen in the market, and even if someone knew with 75% certainty that a stock will go ...


4

https://blog.mint.com/investing/the-dangers-of-leverage-and-some-solutions/ explains this pretty well. It's a lot like other risk calculations in that you can get bigger gains with leverage, but losses can also be larger. The other people whose money you're using are also going to want that money back whether you are operating at a gain or a loss. But ...


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I don’t like to revive an old post, but this came up in my search, so maybe this will help someone out someday. Since the maths are very similar, one can use a physics problem as a metaphor. The idea of convexity can be explained well by comparing it to a motion/ displacement problem in physics. Let’s equate a few things: Distance = price (or payout) of ...


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It's almost certainly bad data for a stock as liquid (highly traded) as Tesla. Look at the charts from other sites and see if you see the same data - I'm betting you don't.


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