Stock market volatility is the amount of fluctuation in price of an asset, and this has a huge effect on trading. This section of Stock Options Made Easy features articles relating to volatility; its impact, its variations, and the various tools and techniques that can be applied to understanding volatility and turning it to the trader’s advantage.
Historic volatility is a measure of the amount of fluctuation a price has experienced in the recent past, and may also offer insight into the likely amount of future price movement.
Implied volatility predicts the amount of fluctuation that a security price is likely to undergo and helps determine whether a trade has the potential to reach a certain price within a timeframe.
The CBOE Volatility Index (VIX) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices.
Harvey's Options Volatility Indicator was designed to help address a need for easy to understand and implement indicators in the marketplace for options trading.
Perception of increased volatility is often a result of emotions that come to the forefront when stock trading, and this may not be a logical approach.
Option volatility refers to the amount of fluctuation experienced in the price of an option and is a very important factor in being able to determine opportunities to buy options.
The volatility smile indicates that an option is likely to experience more fluctuation in price as it moves away from the center point of the smile, which is when its strike price is equal to the current market price of the underlying stock.
Options depend greatly on market volatility. If the marketplace feels a stock will be very volatile, the practical (extrinsic) value of the option rises.
This article offers information regarding shorting VXX and the difficulties encountered.
There are several strategies for volatility survival that investors can bear in mind, that will let them navigate short-term volatility.
A news item from 2011 which offers some interesting insight on the past and future of the VIX.