Implied volatility prices expected move; realized volatility is the actual. When IV >> RV (overpriced), short-vol structures (condors) benefit; when IV << RV, long-vol (straddles) benefits. The spread is a regime dial.
Feature iv_rv_spread = atm_iv minus realized_20d. The filter blocks long-vol entries when IV is already rich and vice-versa. It is context, not a trade alone.
Q: What is IV-RV spread?
A: ATM IV minus 20-day realized vol.
Q: When does short-vol win?
A: When IV is rich versus realized (overpriced).
Q: Is it a trade alone?
A: No — context for the filter, combined with regime.
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By Shakti Tiwari · Options AI research pillar. NISM XII certified. Educational only, not investment advice; verify before acting.