Download or read book Option Markets and Implied Volatility written by Scott Mixon and published by . This book was released on 2010 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traders in the nineteenth century appear to have priced options the same way that twenty-first century traders price options. Empirical regularities relating implied volatility to realized volatility, stock prices, and other implied volatilities (including the volatility skew), are qualitatively the same in both eras. Modern pricing models and centralized exchanges did not fundamentally alter pricing behavior, but they generated increased trading volume and a much closer conformity in the level of observed and model prices. The major change in pricing was the sharp decline in implied volatility relative to realized volatility, evident immediately upon the opening of the CBOE.