If you have stocks that are not in FnO. You can hedge them by buying index puts of equivalent beta.
Many investors I know who even if they have FnO stocks, hedge them exclusively using Index options.
Dude whatever IV , if you plot you will see similiar pattern , What is the situation that makes CE and PE IV increase when market falling , but not when market rising., apart from my question , you talking everything lol.
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, option kingActually i didnt come here for answer your query! But when i read those comments. I thought i should say these people have not even a slighted idea what they are trying to answer.
Use excel for any sorts of calculations rather than using quantsapp etc.
options IVs are calculated exclusively by exchange and I think it is not possible for others to calculate IVs
My observation
Market Falling
- less PE sellers
- less CE sellers
Market Rising
- More PE sellers
- average CE sellers
only if you have some idea , you will tell them they don’t have any idea , so share whats ur Idea.
Its not a best reason,
Iv is increasing , its really Fear , its true
IN falling Market
When market fall , not only (futures short , put option buy , another big animal will also join a party , thats investor ) futures also short . put also buying . demate account holder (investor) also try to liquidate those investment , so three ways the pressure is coming to the under line stock . index are covered with stock only so all the thing are same
the long term investor fund are very big they also join to liquidate the investment in falling market thats a main reason and emotion of investor will play a major role in falling market ,
In rising market
investor money will grow . no one will not sell those big holding , so one animal will out of the game
IV will decrease , because investor will not panic in rising market , even market rising its will go like a step by step only , its natural of the market , only traders will be in the game
investor money only holding the market , not traders
in falling market investor try to liquidate their money in big way . only seller will available, No buyers will available .so its will make a underlying more volatility , no one know where its will be end , so the panic will be reflected in option segment also in the form of IV increase
falling market are like an elevator (hardly no buyer)
rising market are going on a step ( its normal)
These are from the book of INTELIGENT INVESTOR
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western countries are trying to find a vaccination for corna virus , if any country found medicine (or) cornavirus case is decreasing day by day means market will move in two fold in aggressive manner , above VIX 25 are stay away and start accumulating investment , in this market playing in option is really dangerous
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If india introduce , VIX futures , it would be great 
priced between 11 and 35 , tax too will be less.
VIX is actually nifty 50 inside index stock volatility and take a average number and flash in the screen in form of VIX
its not a big diffrence in future
VIX is actually is for volatility in stock
Investor sentiment index will show clear where the market will head clearly
Extreme fear means Investor is trying to liquidate their investment
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Nice and thanks for the informative posts bro , But I observed these in banknifty and nifty options CE , why its IV increasing when market falls…
What did CE do ? It have ony CE sellers and CE buyers… if market falls CE sellers are in profit , so no worries , CE buyers are long undwinding which makes CE go down only… so Why CE IV increases.( option price is overvalued)
I explained clearly ,
for example - ambani hold share worth 1 billions rupees , he knows the market will fall , so what he will do he will never watch simply his 1 billion going down , he will buy PUT equal the value of holding . to protect the downside risk , he will hedge in a big way , so the put IV will increase , because of more buys less sell , its will automatically premium will increase
in rising market he will never do any thing , the underlaying will increase in value
all the thing in the market are investor sentiment only , Not traders
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Yupe I understood , Leave the rising market and leave the PUTS , even let the IV of PUT increase to 30. …
in falling market no one does nothing to CE , if its constant no problem , CE IV too increases to 30
yes i got it , this is the uncertainty in falling market , big investor will hedge in put paying a big premium
in falling market , market will take suddenly take U turn also , so what he will do whatever he buy put 100% in underlaying value , in the call side also they will buy 30% of calls also , for recovering the premium of put , if market rise suddenly he will be in profit on underlaying and calls also , put loss will be matched , only in fear condition they will apply these strategy
these thing i seen in my previous company what they are doing , so only the calls also will not come down easily
So both side we have buyers then sellers ,
in rising market those big guys will not do anything , underlaying will give big profit
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Ok this makes sense …I think I got the answer now. another perspective is
When short strangles fails during violent move , many people first buy huge PUT , when they see the green candle suddenly and see PUT in loss , they buy lots of CE… and doing long strangles , long straddles , to protect max loss…Also buyers who got cheap calls , buy in , hoping for reversal.
It’s just sellers panic and buying PUTS and CE randomly which makes both IV increases.
Actually I am talking about IV in second by second basis , and minute by minute basis… I believe Investor dont step in just for 10 , 20 points fall…
I just saw tick by tick IV today… and felt this experience.
in these seconds and minute traders are purely speculation by traders only , when VIX is below 16 its all speculation (Gamble) trades only Scalpers .will buy and sell in large quanity to make a option price bumble , above vix 20+ are not speculator , its fearfull trades are happened in the option market will move up and down of underlaying
in option market those have a strategy in hand never worry about IV in minute and second , its not make an any sense for sucessfull option trader ,
sucessfull option trader always follow on strategy only , not an IV are Delta
If you want to see IV and delta you are intraday trader , they dont have any strategy in hand , they all are speculator
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