White Paper - Behavior and Options

Shawn Gibson

27 October 2021


  • Behavioral finance has a significant impact on both the short-term and long-term pricing of options
  • The flexibility to use options in creative ways has helped to consistently drive options volume higher as more market participants get more comfortable with their use
  • Most rapid shifts in implied volatility are usually short lived, as implied volatility tends to revert back to long term averages
  • Option investors would be wise to understand the nuances of how implied volatility impacts the price they buy or sell

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The assertions and statements in this blog post are based on the opinions of the author and Liquid Strategies. The examples cited in this paper are based on hypothetical situations and should only be considered as examples of potential trading strategies. They do not take into consideration the impact that certain economic or market factors have on the decision making process. Past performance is no indication of future results. Inherent in any investment is the potential for loss. Options involve risk and are not suitable for all investors. Please see the following options disclosure document (ODD) for more information on the characteristics and risks of exchange traded options.    

Shawn Gibson

Shawn Gibson co-founded Liquid Strategies in 2013 and serves as the Chief Investment Officer and Portfolio Manager.

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