To The Moon

As of August 11 (Mon), $Tesla Motors(TSLA)$ ’s Implied Volatility (IV) stood at 52.11%, while Historical Volatility (HV) was 46.24%.

That’s why we believe Tesla options are relatively expensive. But why is that? 🤔

📘 Let’s see how The Options Handbook explains it:

▶ Using IV/HV to Judge Option Pricing 📊

You can use the IV/HV ratio to gauge whether an option is expensive or cheap:

• Ratio > 1 → IV is relatively high → options are pricey (like Tesla now)

• Ratio < 1 → the opposite

For example, Tesla’s Aug 15, expiry $337.5 strike Call has an IV of 50.96% and an HV of 46.24%. The IV/HV ratio is above 1. This confirms the option is relatively expensive.

As for whether a ratio of 0.8 or 0.7 means “cheap,” you’ll need to check IV’s historical percentile for context.

▶ 🔍 Where to Find IV/HV?

• Per Contract: On each option’s details page, scroll down to see its IV and IV/HV ratio.

• For a Stock, ETF, or Index: In the “Options” tab under Statistics, look for Volatility Analysis. This shows the Total IV—a weighted calculation of IVs from part of the option chain.

🎁 If you want to learn options in a simple and systematic way, start with The Options Handbook—now available in the Tiger Coin Center! 🛒

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>> Click here for the Simplified Chinese version <<