How Does the Seller's View on Implied Volatility Influence the Decision to Sell OTM Options? ⎊ Path

How Does the Seller’s View on Implied Volatility Influence the Decision to Sell OTM Options?

A seller of OTM options generally prefers a high implied volatility (IV) environment, especially if they believe the IV is inflated and will soon drop (a volatility crush). High IV inflates the time value of the OTM option, allowing the seller to collect a larger premium for the same level of risk.

They are essentially betting that realized volatility will be lower than the market's implied volatility.

How Does Block Space Availability Directly Influence the Miner’s Zero-Fee Decision?

What Is ‘IV Crush’ and How Does It Create Risk for Options Buyers Who Pay a Wide Bid-Ask Spread?

Why Do Sellers of Options (Writers) Prefer to Sell When Implied Volatility Is High?

How Do Options Traders Use a Short Strangle Strategy to Profit from High Implied Volatility?

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How Does a “Volatility Crush” Impact the Profitability of Options Market Makers?

What Is a “Volatility Crush”?

How Does a “Volatility Crush” Affect an Option’s Time Value?

Glossar

Implied Volatility Influence

Calibration ⎊ Implied volatility influence within cryptocurrency options necessitates a dynamic calibration process, diverging from traditional models due to the nascent nature of the asset class and frequent structural breaks.