Historic Volatility

[abhishreshthaa]

Historical volatility

• It is a measure of how much the price of the underlying asset changes.
  
  

• historical volatility is observed when deciding about buying or selling an option because one would like to know whether the underlying security would move in a particular direction.

Implied volatility (IV)

• It is the market's perception of the volatility of the underlying security.
  
  
• In simple term, volatility of a stock price is a measure of how uncertain we are about future stock price movements.

For a call owner:

Benefits from price increase but has limited downside risk in the event of price decrease


For a put owner:

Benefits from price decrease but has limited downside risk in the event of a price increase

The value of both put & call , therefore , increases as volatility increases.

 

[rosemarry2]

Re: Volatility

Historical volatility

• It is a measure of how much the price of the underlying asset changes.
  
  

• historical volatility is observed when deciding about buying or selling an option because one would like to know whether the underlying security would move in a particular direction.

Implied volatility (IV)

• It is the market's perception of the volatility of the underlying security.
  
  
• In simple term, volatility of a stock price is a measure of how uncertain we are about future stock price movements.

For a call owner:

Benefits from price increase but has limited downside risk in the event of price decrease


For a put owner:

Benefits from price decrease but has limited downside risk in the event of a price increase

The value of both put & call , therefore , increases as volatility increases.

Hello buddy,

Please check attachment for Notes on Trading Market Volatility, so please download and check it.