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> There are even more nuances with this, as volatility is a smile (or a surface), not a singular number https://en.wikipedia.org/wiki/Volatility_smile.

That article says that implied volatility is inconsistent, with options at strike prices that are very far from the current market price having costs that imply a different level of volatility than options at strike prices that are close to the current price. The cute question here is "should an option be priced according to the actual level of volatility in the price of the underlying asset, or should it be priced according to the level of volatility that exercising the option would require?"

Volatility is just a quantity.




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