 Hey traders, this is T Bradley 90 from the my investing club chat I'm one of the top mentors and moderators in chat as a special gift to our viewers on YouTube We have created a free two-hour course to help teach you how to start a consistently profitable trading business and identify high-paying setups in just 30 days There will be limited seating every week so register for the course and reserve your spot now Using the link in the description as a special bonus for everyone that watches the entire video We will give you the link to a free 10-hour additional mini course that has never been released to the public Register now before all slots completely fill up This week we have a very special video for you guys as one of our consistently profitable Members wanted to give back to the community by creating a free Options course for our members and while this is just a preview of the full link video If you want to watch the full length or any of our exclusive content to become a member of MIC Hello, this is John aka wildlife in MIC chat back for episode number three of option basics Just a quick review what we discussed in the first two episodes. We talked about What options are and how are they used predominantly for insurance? purposes on stocks positions Some people use a speculation so they buy or sell puts or calls generate income on positions that they have and Also stock acquisition. We talked about the two types of Options calls inputs. We just discussed option strings That which is an example you see right here for the S&P 500 ticker is SPY So there's an option string the naming convention Which is which would be the string of characters that had the one that we went over was the SPY So the SPY and then the next two digits would be the year next to after that would be the month The day it expires this caller put would be a C or P and then the last Part of it would be the strike price So in every successful business has some sort of edge that gives them a long-term advantage over someone else or in the marketplace, so how does the company generate revenue or Acquire customers so in this case as traders We want to know what the edges and what the probabilities are of that successful outcome on that trade So as option traders our edge is in implied volatility So a lot of people ask well why why is it in the implied volatility? So the textbook definition Is you can be found you can find a pretty good example at tasty trade comm I kind of put the link, but it talks about what implied volatility or commonly referred to as IV Implied volatility or IV is probably one of the most important metrics to understand and be aware as option traders However in the simplest terms IV is determined by the current price of option contracts on a particular stock or future So that's important because a lot of people believe that implied volatility dictates price And that's that's not true implied volatility is Determined by the current price of option contracts and the current price is dictated by market participants So just like when we talk about a low-float stock that has a low As far as low Availability the more participants the more buyers there drives at the price So there's as their supply is low if their supply low then the price goes up It's this if the demand Excuse me the demand demand is high price goes up is supply is high Price goes down in this case as more people are buying options They drive up the price because generally They are doing that because of some unknown or uncertainty in the market So Going back to implied volatility. It's a represent. It's represented as a percentage that indicates the annual idix Expected one standard deviation deviation range of a stock based on option pricing And we'll talk what standard deviation is down below the loads continue with an example So if we have an iv of 25 on a $200 stock It represents that one standard deviation range of $50 and here's the calculation point two five times 200 equals $50 which would be the expectation over that year So in the example of this $200 the stock and the stock of iv of 25 would mean that there is an implied 68% probability that the stock would settle or trade between 150 and 250 over the next year so Coming full circle into talking a little bit more about standard deviation It's comes out of our statistic class. So for those of you that have had some exposure in statistics You know what one standard deviation means but essentially all we're talking about is that? 68.2% of the time It is one standard deviation the outcomes or whatever your the outcomes would be would fall in that range So when talking about iv one standard deviation essentially means that there's a Approximately a 68% chance or probability that the stock will settle within that range of prices as Determined by option pricing in this case. That's the range that we gave right here So it is a 68% chance that this $200 stock will trade in between 150 250 Sometime in the next year Hey traders, this is Tosh I go by T Bradley 90 in the my investing club chat Just wanted to reach out and say if you have any questions about M. I see joining M. I see maybe you're a member already You have three ways to contact myself personally and through M. I see you can hit our social media You can hit me through pms in chat or you can contact us through my email at Tosh at my investing club comm That's Tosh at my investing club comm I will get back to you in a timely manner and I'm saying this because I'm here to help and I don't want anybody to be afraid To reach out and ask any question that they have we are here for you guys. All right. See you guys