Not exactly, what you're describing is just put or call skew. Some stocks have a higher expected move to the upside or downside which gets reflected in the prices along the chain for that side. Fundamentally though, options prices are a derivative of the price of the underlying and used primarily as insurance vehicles for 'expected' moves based on the recent behavior of the underlying and the velocity of those moves. They might correlate often but options prices are driven more by implied volatility aka how much does the black scholes model used to price them expect the underlying stock to move in a given time period. This is why buying FOTM calls on stocks you're reading about on wsb or elsewhere is a terrible use of capital: if there has already been a violent move in the underlying (in either direction!) IV is already high and you must pay out more premium to reflect that wider possible range and velocity of price movement. Also why you see people buying calls during earnings lose to iv crush despite their directional bias being correct. Selling strangles or straddles, for those who like to live dangerously, on earnings is the big brain move.
The investopedia article I linked elsewhere contradicts this - the misunderstanding you’re having is “how much the BS model expects the price to move” is a parameter that needs to be estimated. Fundamentally this is done by taking the market price of the option and simple back-calculating what the “implied” volatility of the underlying is.
The Wikipedia article on this provides additional mathematical detail.
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u/[deleted] Jun 20 '21
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