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hey man keep up the videos theyre going to have so much long term value. You're a pretty normal looking guy and can express things very clearly. Hope too see more vids from you. Proud of you
Thank you so much for that! I appreciate the positive feedback and the support. And to your point, I'm always trying to make videos that will be relevant 5 years from now!
Ryan, you have such a unique style to help us understand these complex topics. Thank you so much for your efforts. I specially like the way you add beautiful visuals while you explain. I have been making notes and hope to connect with you some day, when I become a full time trader.
here you said volatility is high for longer maturity and low for nearest maturity however at the end part you mentioned vega is high for atm which is closest to expiry. Can you confirm which is correct?
Hey! I think you are conflating two different topics here: 1. When we are talking about longest maturity and nearest maturity, we are talking about how long until the option expires, so time to expiration. 2. When we are talking about at the money (atm) we are talking about how close the strike price is to the underlying price, it has nothing to do with time Two totally different concepts. Does that make sense?
@@amitsingh009 Let me clarify: An ATM option's vega is affected by BOTH strike proximity to the current price (moneyness) AND time to expiration. The effects combine like this: + Being ATM increases vega (compared to OTM/ITM options) - BUT being close to expiry decreases vega (compared to longer-dated options) So for an ATM option that's very close to expiry, these effects work against each other. Although, the time effect should dominate as we can see on the right side of the graph @8:40 this at the money option's vega goes to zero as it approaches maturity
so, in terms of pricing vega is used akin to bootstrapping method for bond pricing? you just derive prices from intrinsic characteristics, so to speak?
🎓 Tutor With Me: 1-On-1 Video Call Sessions Available
► Join me for personalized finance tutoring tailored to your goals: ryanoconnellfinance.com/finance-tutoring/
hey man keep up the videos theyre going to have so much long term value. You're a pretty normal looking guy and can express things very clearly. Hope too see more vids from you. Proud of you
Thank you so much for that! I appreciate the positive feedback and the support. And to your point, I'm always trying to make videos that will be relevant 5 years from now!
Ryan, you have such a unique style to help us understand these complex topics. Thank you so much for your efforts. I specially like the way you add beautiful visuals while you explain. I have been making notes and hope to connect with you some day, when I become a full time trader.
You're very welcome! I'm really glad to hear you are enjoying the videos that much Sushaant. Best of luck on the journey!
i just LOVE your videos!!! keep going please. you explain everything sooo well
Thank you so much, I have no plan on stopping!
here you said volatility is high for longer maturity and low for nearest maturity however at the end part you mentioned vega is high for atm which is closest to expiry. Can you confirm which is correct?
Hey! I think you are conflating two different topics here:
1. When we are talking about longest maturity and nearest maturity, we are talking about how long until the option expires, so time to expiration.
2. When we are talking about at the money (atm) we are talking about how close the strike price is to the underlying price, it has nothing to do with time
Two totally different concepts. Does that make sense?
@RyanOConnellCFA I understand that but what about vega of atm position which is near to expiry? Will it be less or high?
@@amitsingh009
Let me clarify:
An ATM option's vega is affected by BOTH strike proximity to the current price (moneyness) AND time to expiration. The effects combine like this:
+ Being ATM increases vega (compared to OTM/ITM options)
- BUT being close to expiry decreases vega (compared to longer-dated options)
So for an ATM option that's very close to expiry, these effects work against each other.
Although, the time effect should dominate as we can see on the right side of the graph @8:40 this at the money option's vega goes to zero as it approaches maturity
@@RyanOConnellCFA thanks a lot it helped!!
@@amitsingh009 Awesome, my pleasure!
thats great thanks a ton!
My pleasure Amir!
so, in terms of pricing vega is used akin to bootstrapping method for bond pricing? you just derive prices from intrinsic characteristics, so to speak?