DEFINITION of 'Volatility Swap'
A forward contract whose underlying is the volatility of a given product.
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BREAKING DOWN 'Volatility Swap'
This is a pure volatility instrument allowing investors to speculate solely upon the movement of a stock's volatility without the influence of its price. Thus, just like investors trying to speculate on the prices of stocks, by using this instrument investors are able to speculate on how volatile the stock will be.
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Historical Volatility  HV
The realized volatility of a financial instrument over a given ... 
Volatility Arbitrage
Trading strategies that attempt to exploit differences between ... 
TimeVarying Volatility
Fluctuations in volatility over time. Volatility is the standard ... 
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Implied Volatility  IV
The estimated volatility of a security's price.
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If the stock market is so volatile, why would I want to put my money into it?
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