Implied Volatility

The speaker uses GOOG as an example to present how volatility affects options.  He suggests that a calendar spread options strategy will benefit from rising volatility because the calendar spread is a positive vega position.

The speaker uses Google's stock to show an example of how to calculate implied volatility using microsoft excel.  Implied volatility is a reverse engineering exercise which can be calculated given the price of the option, strike price, risk free rate of return, term to maturity and dividend yield. 

The speaker discusses the definition of implied volatility.  He covers the difference between implied volatility and historical volatility; implied volatility is forward looking while historical volatility is backward looking.  He uses google stock to provide an example of implied volatility at work.