Finding Mispriced Options    • 149
strategies involving the simultaneous purchase and sale of multiple con-
tracts to be a poor investment strategy.
Implied Bid Volatility/Implied Ask Volatility
Because the price is so different between the bid and the ask, the range of fu-
ture stock prices implied by the option prices can be thought of as different 
depending on whether you are buying or selling contracts. Employing the 
graphic conventions we used earlier in this book, this effect is represented 
as follows:
Implied price range implied
by ask price volatility of 23.4%
Implied price range implied
by bid price volatility of 21.4%
6/21/201612/24/20156/27/201512/29/20147/2/20141/3/20147/7/20131/8/20131/12/2012
Oracle (ORCL)
Price per Share
60
50
40
30
20
10
-
Because Oracle is such a big, liquid company, the difference between 
the stock prices implied by the different bid-ask implied volatilities is not 
large, but it can be substantial for smaller, less liquid companies. Looking 
at the ask implied volatility column, you will notice the huge difference 
between the far ITM options’ implied volatilities and those for ATM and 
OTM options. The data in the preceding diagram are incomplete, but 
if you were to graph all the implied volatility data, you would get the 
following: