> Supposed to.

Well stddev is nice for their mathematical model. The critique is that the model is not really measuring risk in the business. It sounds more plausible for options though.

Understood. I just wonder if that pricing accurately measures probability of these events. Of course the market encouraged it to, but people also still measure stock risk as standard deviation of price, so idk.

Interesting. That intuitively makes sense to me for commodities. The option is purchased to reduce volatility even though it costs a little more (basically an insurance product). So in aggregate the insurers win for taking on the risk.

I guess I'm just surprised that's the case with stock.

Are options just fundamentally under priced? They give extreme upside potential for a relatively small price.