This episode provides an extensive overview of trading option implied volatility (IV), starting with the fundamental concept of volatility as a measure of return dispersion. It thoroughly explains the challenges in measuring realized volatility, noting that it is an unobservable and constantly evolving quantity, often requiring backward-looking measures like quadratic variation. A key distinction is made between realized volatility (historic price movement) and implied volatility (derived from option market prices), emphasizing that IV is directly observable and forward-looking. Finally, the text introduces a statistical trading strategy based on the mean-reverting nature of IV, suggesting opportunities to buy options when IV is low and sell when IV is high, while stressing the importance of considering economic intuition and associated risks in model development

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