How to interpret Annual IV in terms of Monthly IV?

F&O
1

@Sensibull

IV is calculated on an annual basis, right? (the expected 1 standard deviation return from the mean or the current atm price),

Then why do sellers sell a strangle 1 SD away from the atm x days(below 45 days) away from expiry when the IV is calculated on an annual basis?

2

Ummm. Honestly I do not even know what is this 1 SD business :slight_smile:

Its just a number people have come up with to have a sense of control, may be

1 Like
3

ok!!