Is there a practical method to calculate some sort of average IV for each level of moneyness of equity options?

I'm thinking of an algorithm to find mispriced options and do to so, we need to figure out what is the expected IV depending on the moneyness of the option.

  • $\begingroup$ Thank you @noob2. I know that average IV isn't good, especially if we want to calculate it using historical data since the underlying most probably have already moved. I'm looking for some sort of measure similar to what used as mean as I'm hypothesising that IV should revert to some sort of average if it priced correctly. $\endgroup$ – Mehdi Zare Feb 5 at 13:23
  • $\begingroup$ It's like expected value and mean, right? We expect the realized mean to be the expected mean we calculated beforehand. We input market price and get the IV, we can also input historical market prices and get the volatility at that time. What's the different? I'm not implying to use historical underlying price, but using historical option prices. $\endgroup$ – Mehdi Zare Feb 5 at 13:41

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