Q: What is Volatility?

Volatility come in two types, namely: 1. Historic volatility : this is the yearly standard deviation of a product's price. The more it goes up and down in price, the higher the measure of volatility becomes. 2. Implied volatility : since volatility is a measure of risk, it is used to input models to price options. Therefore if the option pricing formula is reworked, you can calculate the volatility from an option's market price.

Q: What is Volatility?

Volatility come in two types, namely: 1. Historic volatility : this is the yearly standard deviation of a product's price. The more it goes up and down in price, the higher the measure of volatility becomes. 2. Implied volatility : since volatility is a measure of risk, it is used to input models to price options. Therefore if the option pricing formula is reworked, you can calculate the volatility from an option's market price.

Question 1

What is Volatility?

James Rabinovich · Accepted Answer

Volatility come in two types, namely:

1. Historic volatility: this is the yearly standard deviation of a product's price. The more it goes up and down in price, the higher the measure of volatility becomes.

2. Implied volatility: since volatility is a measure of risk, it is used to input models to price options. Therefore if the option pricing formula is reworked, you can calculate the volatility from an option's market price.

Question 2

What is Volatility?

James Rabinovich · Accepted Answer

Volatility come in two types, namely:

1. Historic volatility: this is the yearly standard deviation of a product's price. The more it goes up and down in price, the higher the measure of volatility becomes.

2. Implied volatility: since volatility is a measure of risk, it is used to input models to price options. Therefore if the option pricing formula is reworked, you can calculate the volatility from an option's market price.

What is Volatility?

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