Money Math

shortcuts to get implied vol from a straddle

I just want to say that you people are sick. This is the most viral tweet I can remember sending in recent times.

Because I happened to be helping the 3rd grader with improper fractions recently I saw 1.25 as 5/4 which is immediately recognizable as a square root of 25/16.

Sprinkle in some trader math that condemns you to see the sqrt(251) as 16 and you get an even more compact version:

Step by step:

The real masochism in that thread happens further below…

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