it’s because B-S and the like are where we get our estimates of vol from!
In the sense that Black-Scholes converts prices to implied volatility, yes. However implied volatility from the options markets is a biased predictor of future realized volatility—it tends to overestimate it quite a bit.
Yes, there’s a reason we look at options-implied vol—it’s because B-S and the like are where we get our estimates of vol from!
In the sense that Black-Scholes converts prices to implied volatility, yes. However implied volatility from the options markets is a biased predictor of future realized volatility—it tends to overestimate it quite a bit.