Replies to post #304 on Option Education

[Fox13]

Hello Lee! An interesting options situation appeared for one of my trades after OpEx. This IWM trade was previously exposed on another board, and the short arms of the time spreads used are presented on the chart bellow. It appears that I did OK since on Friday, at 16:15, when the options market closed, IWM last was 79.51. Thus, all Mar options sold (to open) expired either worthless or were very cheap (Mar 31, which I bought to close).

How I managed the Apr long arms during the last 2 wks is immaterial and I won’t bother anyone with it. The fact is that now I own a “Tight Strangle”: long IWM Apr 79 P (close=2.23) & long IWM Apr 80 C (close=1.85)...although the expiration value of IWM was exactly at half distance between the 2 legs of my left-over strangle….Hmm!!!!
Let’s see a little bit more:
Apr 80 C theor. val. = 2.06 (impl vol = 26.46)… while Apr 79 P theor. val. = 2.029 (impl vol = 26.43)
Does this discrepancy between theory and market reality tell us something about the “sentiment” of options traders???
Are they smart money?…LOL!
Alternatively, is this the a game between the buyers and sellers of options in which a faction dominates the picture?
Someone suggested to me that some “wise guys” fixed the prices in function of their strong views on the VIX moves on Monday…
Obviously, my interest in this matter is more than purely theoretical…