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Implied volatility is a powerful but often misunderstood metric that plays a major role in options trading. Implied volatility doesn’t tell you what’s going to happen to an option’s price ...
In finance, volatility (usually denoted by "σ") is the degree of variation of a trading price series over time, usually measured by the standard deviation of logarithmic returns. Historic volatility measures a time series of past market prices.
Implied volatility can be a confusing concept for investors who are just starting to trade options. While the idea of volatility is easy to understand, trying to estimate it is more difficult. ...
The Volatility Index futures have become seriously traded in recent days as traders and hedgers alike, use it as a hedge against their positions and there is a record amount of money that has ...
If an option is held as part of a delta neutral portfolio (that is, a portfolio that is hedged against small moves in the underlying's price), then the next most important factor in determining the value of the option will be its implied volatility. Implied volatility is so important that options are often quoted in terms of volatility rather ...
To an option trader engaging in volatility arbitrage, an option contract is a way to speculate in the volatility of the underlying rather than a directional bet on the underlying's price. If a trader buys options as part of a delta-neutral portfolio, he is said to be long volatility. If he sells options, he is said to be short volatility. So ...
Ryan Detrick, LPL Financial Chief Market Strategist, and Frances Stacy, Optimal Capital's Director of Strategy, join Yahoo Finance Live to discuss market volatility tied to crude oil and the Fed's ...
Volatility risk is the risk of an adverse change of price, due to changes in the volatility of a factor affecting that price. It usually applies to derivative instruments , and their portfolios, where the volatility of the underlying asset is a major influencer of option prices .