Examples of using Implied volatility in English and their translations into Vietnamese
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Probability distributions, implied volatility, and the Greeks.
The implied volatility of the option is determined to be 18.0%.
There is another type of volatility known as implied volatility.
This occurs when implied volatility falls after the trade is entered.
In the options markets, there is another measure of volatility, called"implied volatility.".
When implied volatility drops, the price of the options loses value, all else being equal.
There is no guarantee that the forecasts of implied volatility or the Greeks will be correct.
Expresses the price change of an option for a one per cent change in the implied volatility.
This section includes mastering implied volatility and premium pricing for specific strategies.
This is generally because VIXis a sentiment indicator used to measure implied volatility.
By selling high implied volatility, we are also betting for the volatility to revert to the mean.
When it comes to option trading, the tool to use tomake this determination is the variable known as implied volatility.
Now let's consider the effect of changes in implied volatility levels on this example calendar spread.
A short time later, the option is trading at $2.10 with the underlying at $43.34,yielding an implied volatility of 17.2%.
Ideal Trade Situation: When implied volatility is high in the underlying, that is the ideal situation to sell an option.
A non-option financial instrument that has embedded optionality,such as an interest rate capcan also have an implied volatility.
Therefore, it's helpful to understand where the current implied volatility level stands in connection with its medium-term selection.
The main factors affecting an option's price are the underlying security's price, moneyness,useful life of the option and implied volatility.
The factors that affect implied volatility are the exercise price, the rate of return, maturity date and the price of the option.
Ideal Trade Situation: The main way to make money, if you buy a put,is when the underlying asset drops lower, implied volatility rises or a combination of the two.
Another way to look at implied volatility is to think of it as a price, not as a measure of future stock moves.
However, in some cases(large strike, low strike, short expiry, large expiry)it is possible to give an asymptotic expansion of implied volatility in terms of call price.
To verify, we apply the implied volatility back into the pricing model, f(), and we generate a theoretical value of $2.0004.
The reason why this type of trade is useful is because when a big event is about to occur,such as when a company is set to release earnings, implied volatility rises due to the uncertainty of the outcome.
Implied volatility is so important that options are often quoted in terms of volatility rather than price, particularly between professional traders.
Some technical indicators that accompany wave A include increased volume,rising implied volatility in the options markets and possibly a turn higher in open interest in related futures markets.
Implied volatility of an option contract is the value of the volatility of the underlying instrument which, when input in an option pricing model(such as Black- Scholes) will return a theoretical value equal to the current market price of the option.
If an option is held as part of a delta neutral portfolio(that is, a portfolio that is hedged against small moves in the underlying price), then the next most important factor indetermining the value of the option will be its implied volatility.
Following this decline in implied volatility, the breakeven price range for this trade has narrowed to the $203 to $218 price range, and the maximum profit potential has dropped to just $334.
Before discussing the implications of changes in implied volatility on a calendar spread, let's first look at how a calendar spread works and what exactly implied volatility is.