Implied Volatility in Bullish and Bearish Markets
Hey all, I’ve been thinking about this for a while and haven’t been able to completely understand it as of yet. I was wondering why implied volatility tends to increase in bearish markets – I saw one piece of text relating it to risk and equity but it wasn’t very clear and didn’t actually give the reasoning behind it. It was from an investopedia page and I will link it at the bottom, there is a small paragraph on bullish and bearish markets if you scroll down a bit. I am also curious why implied volatility decreases in bullish markets and what the reasoning behind it is. Thanks to anyone who can clarify this for me.
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July 27, 2021 at 05:03PM