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Understanding Implied Volatility vs. Historical Volatility
Discover the differences between historical and implied volatility, and learn how the two metrics can determine whether options sellers or buyers have the advantage.
What is the relationship between implied volatility and the volatility skew?
Learn what the relationship is between implied volatility and the volatility skew, and see how implied volatility impacts the prices of options.
Volatility Swap Definition
A volatility swap is a forward contract with a payoff based on the realized volatility versus the implied volatility of the underlying asset.
Local Volatility (LV) Definition
Local volatility (LV) is a volatility measure used in quantitative analysis that provides a more comprehensive view of risk when pricing options.
Volatility Smile Definition and Uses
A volatility smile is a U-shaped pattern that develops when an option’s implied volatility is plotted against varying strike prices.
Cboe Volatility Index (VIX) Definition: What Is It?
The Cboe Volatility Index, or VIX, is an index created by Cboe Global Markets, which shows the market's expectation of 30-day volatility.
Volatility Definition: Calculation & Market Examples
Volatility measures how much the price of a security, derivative, or index fluctuates.
Time-Varying Volatility Definition
Time-varying volatility refers to the fluctuations in volatility over different time periods.
Implied Volatility: Buy Low and Sell High
The success of an options trade can be significantly enhanced by being on the right side of implied volatility changes.
Strategies for Trading Volatility With Options
These five strategies are used by traders to capitalize on stocks or securities that exhibit high volatility.