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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 ...
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 ...
[citation needed] On March 26, 2004, trading in futures on the VIX began on CBOE Futures Exchange (CFE). [19] On February 24, 2006, it became possible to trade options on the VIX. [19] Several exchange-traded funds hold mixtures of VIX futures that attempt to enable stock-like trading in those futures. The correlation between these ETFs and the ...
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 ...
A volatility exchange-traded fund (ETF) lets traders bet on an increase in the stock market’s volatility. It can be a highly profitable wager if the market suddenly becomes more volatile, for ...
Futures trade on exchanges and are available for qualified investors to trade. To purchase a futures contract, traders must put up a portion of its value (called margin), ranging from 3 to 12 ...
CBOE Volatility Index (VIX) from December 1985 to May 2012 (daily closings) 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.
Stock futures trade six days a week — every day except Saturday — and are only closed for one hour per trading day, from 5:00 p.m. EST to 6:00 p.m. EST.