The mistaken belief you refer to is a common confusion between stating that the price went up because demand went up and/or supply went down (tautologically true, but meaningless statement) or because buyers entered the market and/or sellers exited the market (usually false). This has nothing to...
for reading I opt more for VIX white paper and that sort of thing, but I suspect they aren't the most impartial straight to the facts sources out there. I'll check out Hull's book
@CQM VIX white paper is just a very specific document regarding their methodology for an index they created, not meant as a practical guide to understanding implied volatility.
Sure, but you must have gotten the mistaken notion that prices change because of more buyers or sellers from somewhere, and surely not VIX white papers. Wherever you read that, just know that you are reading something by someone who doesn't know what they're talking about.
I see it repeated in a lot of places, the key phrase being "Supply and Demand", although I've seen prices walk up or down on high and low volume, and make good trading decisions on convergence or divergence of volume:price
When people use supply and demand to explain price moves, they are not wrong, but neither are they saying anything meaningful. If prices have changed, then by definition supply and demand have changed. It is just something financial journalists say when they have nothing better to say, kind of like saying the market rallied today because some sellers felt like raising their prices today while some buyers were OK with the higher prices.
I have no comment on whether the presence or absence of volume concommitant with a change in prices has any predictive power. I don't know that it does, but neither do I know that it doesn't.
Black and Scholes invented the term implied volatility to explain a parameter in their model. It does not exist as a real thing that can be measured outside of a model.
Now, it so happens that in the case of most options, the price may change a lot while implied volatility is relatively steady, hence participants in the markets for options have adopted the convention of speaking about implied volatility rather than price.
Discussion between Tal Fishman and CQM
Discussion between Tal Fishman and CQM