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This is why options traders (prototypical ones at least, I suspect most trading is still directional) trade on the implied volatility, as a projection of future
by mhh__ 3y ago
This is why options traders (prototypical ones at least, I suspect most trading is still directional) trade on the implied volatility, as a projection of future volatility.
You take a view on volatility by buying or selling an option, if you are right then you will make money proportional to the options gamma (i.e. the convexity of the option is where the money comes from)