Crash in IV

brother, I am not sure, but one way of doing that might be to check the IV Percentile Values over past time periods of different durations. If the IV is among the Top Percentile, then that might be inflated and vice verse. Although I am myself not completely sure about this approach, maybe if other members post their views about the same, then we can understand it better.

And secondly, I also want to know, if it is possible for some big market operators to somehow Fake or Manipulate the IV Value for any particular counter, according to his own trading game plan, such that his open positions benefit from that kind of change in IV.

I will try to explain it with an example. Suppose some real big player has created positions worth Rs 100 crore in the Options Segment of Infy. Now, suppose that his option position would benefit greatly if there is a big jump in Infy IV over next 2-3 days. So, my question is that, is it possible for this guy to somehow Manipulate the IV of Infy in order to increase it ? Can he play some trick in the various option strikes of Infy, in such a manner, which would create a spike in the IV ? Is it possible at all or not ? Please share your views about such a hypothetical scenario.

We can look at it from the opposite side as well. If some big operator wants to crash the IV of Infy for his benefit, then can he do that in some way ? Is it possible ? If yes, then how ?

Thanks a lot

We don't want to understand how to crash an IV,all we would want is to understand if an IV is inflated or not.

I think that can be done by checking the daily IV on a chart and superimposing some moving average on top of that chart.

brother, I am not sure, but one way of doing that might be to check the IV Percentile Values over past time periods of different durations. If the IV is among the Top Percentile, then that might be inflated and vice verse. Although I am myself not completely sure about this approach, maybe if other members post their views about the same, then we can understand it better.

And secondly, I also want to know, if it is possible for some big market operators to somehow Fake or Manipulate the IV Value for any particular counter, according to his own trading game plan, such that his open positions benefit from that kind of change in IV.

I will try to explain it with an example. Suppose some real big player has created positions worth Rs 100 crore in the Options Segment of Infy. Now, suppose that his option position would benefit greatly if there is a big jump in Infy IV over next 2-3 days. So, my question is that, is it possible for this guy to somehow Manipulate the IV of Infy in order to increase it ? Can he play some trick in the various option strikes of Infy, in such a manner, which would create a spike in the IV ? Is it possible at all or not ? Please share your views about such a hypothetical scenario.

We can look at it from the opposite side as well. If some big operator wants to crash the IV of Infy for his benefit, then can he do that in some way ? Is it possible ? If yes, then how ?

Thanks a lot

Easily values can be manipulated and for that not such big sum required- for some scrips. Lots of scrips there where total traded qty of options will be less than 1000. For those illiquid scrips, price manipulation is not big deal. Even for middle sized FNO stocks it can be done for OTM strikes. Just put a sell price high. During expiry period you will see many examples.

This post is related to the IV Crash that happened in Infy Options on 12 October 2015, after the quarterly results were announced.

http://www.traderji.com/options/100187-option-trading-strategies-related.html#post1110993

Regards

Does this mean option sellers were successful ?

amit bhai, on the Calls side, the option sellers made big money. But since the Infy spot went down around 4 %, therefor the Puts have gained, therefor the put sellers did not make money.

Update of Infy Options at EOD -




Thanks and regards

So what strategy should have been employed before Infy result ?

Buying Naked puts and selling calls ?

What is that strategy called ?