Explain the Pattern of Implied Volatility That Is Often Referred

question 16

Essay

Explain the pattern of implied volatility that is often referred to as a smirk.(Use a call as your example.)

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Definitions:

Cognitive Dissonance

A psychological phenomenon where an individual experiences discomfort or distress due to holding conflicting beliefs, attitudes, or values.

Intergroup Aggression

Aggressive behavior that occurs between different social groups, driven by cultural, racial, or ethnic differences, often fueled by stereotypes and prejudice.

Scapegoating

Scapegoating describes the act of blaming an individual or group for problems or negative outcomes that they did not cause, often as a way of deflecting attention or responsibility.

Authoritarian Personality

A personality type characterized by adherence to strict obedience to authority and the belief in rigid social hierarchy and norms.