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78 views

Stock market - Searching for rate of change

Suffice to say, most investors/traders have their own personal strategy and I would think it is reasonable to assume that each strategy has an ideal rate of change. For the sake of argument, lets ...
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2answers
55 views

Is it possible to improve stock purchase with limit orders accounting for volatility?

As a retail investor that puts a certain monthly amount into equity, I was wondering which is the best way to proceed when purchasing stocks. By best I mean the one that would allow me to purchase the ...
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1answer
68 views

How is a long call and short stock portfolio equivalent to lending money

In his book 'Volatility Trading' Euan Sinclair writes that a hedged portfolio of long call and short stock is equivalent to lending money. He did not provide much clarification, so I am wondering, ...
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1answer
69 views

What are pros and cons of volatility trading over directional stock trading

Is it true or just my misconception that pro traders trade volatility while retail readers try to predict stock direction (unsuccessfully most of the time). What are the pros and cons of trading ...
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0answers
51 views

How can I affect implied volatility of an option?

Implied Volatility represents the actual above-market premium an option contract trades for at any point in time, but it changes in mysterious ways. If I wanted implied volatility to be higher, could ...
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1answer
45 views

How much does the volatility change for a 1$ move in the underlying

Is there a quick and dirty way to approximate how much the volatility of an underlying would change for a 1$ move in the underlying. The individual option Greeks measure the sensitivity of an option ...
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1answer
43 views

Estimate a future option price given greeks and a 1$ move in underlying

Let us say underlying is at 50$, and the 50 call is at 0.50. delta=0.5, gamma =0.5, theta = .02, vega = .10. I apologize if these numbers are not realistic, I am very poor at Greeks. My question is: ...
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1answer
63 views

Why we sometimes use mean and sometimes use standard deviation to measure volatility

Both the metrics average true range and historical volatility measure volatility of a financial instrument's price. Average true range measures volatility on an intraday basis, while historical ...
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1answer
43 views

Why Gamma shares an inverse relationship with volatility

At this TOS tutorial On page 3: Tom Preston: Gamma increases when the option is at the money, the option is close to expiration or volatility is low I am confused about 'volatility is low' ...
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3answers
85 views

What exactly am I buying when I buy volatility

When I buy a share in a company, I buy a piece of the company, however small. In recent times, there is a lot of interest in trading volatility. Now my first question is: when i buy volatility (by ...
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2answers
173 views

Why VIX shares an inverse relationship with SPX

Why is it that when the s&p 500 index as tracked by the SPX goes up, the corresponding volatility index as tracked by VIX goes down. I understand that volatility is directly affecting the price ...
2
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1answer
67 views

Why is volatility in a positive direction clubbed in the same risk category as volatility in a negative direction?

Let's say a stock's price has been steadily rising for the last 6 months. It's going to have (a relatively) high volatility. Let's say another stock's price has been falling steadily for the last ...
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1answer
93 views

Is the average true range a better measure of volatility than historical volatility

The calculation of historical volatility only takes into account the closing stock prices. Is it a better measure of really how volatile the stock is as compared to a measure like average true range? ...
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1answer
249 views

How to read an implied volatility percentile chart

In this free source of volatility data, there is a column Days/Percentile. How to interpret this? It says: Days:the number of days back for which implied volatility has been calculated ...
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1answer
80 views

Why IV and stock price are inversely related

What is the reason that Implied Volatility and Stock Price are inversely related? Is it possible to understand this qualitatively without getting into the math of the Black-Scholes formula?
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1answer
37 views

Online service that computes implied volatility

Is there a free online service that will give me the Implied Volatility of a stock or ETF based on the current option price? Or do I need to calculate myself in excel? I found this resource on IV but ...
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1answer
93 views

Inverse Relationship between Volatility and Beta

From P78 in ETF for Dummies, 2nd Ed, by Russell Wild : Beta’s usefulness is greater for individual stocks than it is for ETFs, but nonetheless it can be helpful, especially when gauging the ...
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2answers
2k views

Why call option price increases with higher implied volatility

As per the BS model the value of a call option is directly proportional to the implied volatility. Without getting into the derivation of the BS equation, is it possible to intuitively understand why ...
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1answer
46 views

Options price vs implied volatility - who drives who?

In this article we have: In contrast, IV is derived from an option’s price and shows what the market “implies” about the stock’s volatility in the future. Implied volatility is one of six inputs ...
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1answer
144 views

Reasons behind a large price movement of a penny stock without any recent news releases?

Sometimes I see penny stocks on the Yahoo! Finance page move by about 100% in a single day. For example, this stock shows a 91% gain on 10-Jan-2014. By browsing the news reports, I cannot see ...
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1answer
350 views

Why do more floating shares mean less volatility for the stock?

In the article Investopedia explains 'Floating Stock', it states: The more shares of floating stock are available, the less volatile a company's stock price is likely to be, and vice versa I ...
2
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1answer
198 views

How is the price of VXX determined?

I'm trying to understand how VXX works (the prospectus on Barclay's Ipath). It says that it has a rolling position in futures (1 month and 2 month). Does that mean that it buys and sells contracts ...
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1answer
4k views

What does it mean to long convexity of options?

In this Bloomberg video, Curnett talks about volatility and the convexity of options. Specifically, he says; "The spread between the VIX sitting there at 20 for a period of time and this realized ...
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1answer
306 views

Why did Apple instantly become the most volatile stock in the US?

I fully understand that it went up quickly by a lot, and have no problem with the recent drop. But why did it seem to instantly become so volatile? It seems like every day it's up or down 2% or ...
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1answer
641 views

How to see an option chain's implied volatility skew

Are there any inexpensive tools, web-sites or services you know of where one can see: a) current implied volatility skew for an option chain b) historic implied volatility skew Thanks
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2answers
606 views

What is volatility drag?

Given a leverage portfolio, what does the term volatility drag mean? And how does it affect the value of the portfolio?
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4answers
248 views

Is it possible to quantify the probability of sudden big movements for a high-volume stock?

As an example: Over this past weekend, from Friday close to Monday open, Netflix (NFLX) dropped about 36% in stock price. Going back to July, Netflix was trading near $300, and now it is at about ...
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1answer
1k views

What is the UK equivalent of the VIX volatility index?

The VIX is a measurement of volatility in US markets. What about UK markets?
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1answer
125 views

What to make of historical stock market volatility?

I looked on Google Finance today at the DJIA, and kept backing up the time window until I saw the whole display they had, from 1971 until today (Oct 2011). It seemed to me that the volatility--the ...
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7answers
1k views

How to make money from a downward European market?

The trader Alessio Rastani speaks in a BBC interview about the development of the Euro zone and his predictions are quite severe. He predicts a crash within the next 12 months but is also telling ...
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2answers
236 views

Why is silver so volatile compared to the S&P 500?

As an example, silver took a 9.4% hit on 9/22/2011, which was a bad market day -- the Dow dropped over 3.5%. The conventional wisdom is that precious metals like silver are a hedge against a falling ...
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2answers
711 views

how does one see the CBOE VIX index on Google Finance?

How does one see the CBOE VIX index on Google Finance? What is a symbol I can use?
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1answer
85 views

How do I research, analyze, and choose the right mutual fund for a roth ira?

I recently opened a Roth IRA in the USA and I'm new to investing. How do I research a mutual fund and what aspects should I analyze to figure out if it fits my investment strategy (I might not even ...
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5answers
1k views

Why are the prices of some commodities (e.g. oil) more volatile than others?

Why are the prices of some commodities (e.g. oil) more volatile than others?