[RoosterRedux]

It was complicated, even for me (and I’m a bit of a nerd). I was analyzing Nvidia stock options, looking for leading indicators by examining changes in implied volatility of puts and calls in an otherwise flat market. I wanted to see if shifts in implied volatility might signal whether certain option prices would move up or down within the next 5 to 10 minutes, assuming the stock price stayed stable.

What I found was an interesting inverse correlation: a sudden increase (say 10%) in the implied volatility of slightly out-of-the-money puts seemed to predict a rise in call prices within a few minutes. ChatGPT suggested this correlation was strong enough to make a small profit, as long as the market remained flat and I acted quickly.

The challenge was that the profit margin was minimal. I’d make money on three trades, then lose on the next one. After about 10 trades, I realized that while the pattern was real, it required conditions to be so precise that trading on it all day would be exhausting without yielding substantial profit (percentage-wise).

In the end, it wasn’t a winning strategy, but I learned a ton about what ChatGPT can do when applied to options analysis.

[bankwalker]

a sudden increase (say 10%) in the implied volatility of slightly out-of-the-money puts seemed to predict a rise in call prices within a few minutes

That has always been the case and is due to arbitrage. Some big trading companies take advantage of that all day long and you'll never be quick enough to take it from them.

[BigFreakinToad]

whoa, I almost need an AI to explain that. Sounds very very complicated.