Volatility and Options Pricing
Even though I’ve told you that buying calls is relatively easy, I’m going to contradict myself and look under the hood of the car and see how the engine works, to use a popular analogy. It won’t be long before you understand why options trading has a reputation for being challenging. (Some say this really is rocket science!) Many consider option pricing the most complex area of finance.
Although volatility and options pricing can be baffling at times, I try to make these concepts understandable. This chapter is so important, and also so theoretical, that you may have to read it more than once.
If you are serious about trading call options, it’s essential for you to understand volatility and options pricing. For ...