Today’s conversation centers around the broad market index, S&P 500, how it is priced, and how that pricing affects its implied volatility (IV). The guys dive into stock prices and weightings to flesh out index pricing using some formulas, and then move onto the dynamics of those weightings.
Just as weightings of the underlying stocks that make up the S&P 500 change over time, theof those stocks change causing the index’s IV to change along with the weightings. With the current environment seen in the S&P 500, we look into how it has been decreasing with the IVs of the individual stocks.
Finally, the video concludes with a look at theover the years and how opportunity for selling options during a high IV Rank has not diminished over the years in the broad market or the single stocks.