A question from BRIANMCFM…
Talking about implied standard deviation, such as…to get to a 1 std deviation strangle in SPY you would be selling the 16 delta put and call, and you would have a %68 chance of it expiring worthless and a %34 chance of it touching the strike before expiration, but in reality you actually have an %85+ chance of it expiring worthless, especially if you put it on in a higher volatility environment.
Has anyone figured the stats on binaries yet? Like Darrell says, buying a binary with a %20 probability works out %20 of the time usually, but over time, does it work out to be exactly %20? Or is it %18 or %24? I know the listed market options are priced very accurate and so should the binaries right?