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Great Sites:
Index-Day-Trading
QQQQ-Market-Timing
Trading-Glossary
TradersFloor
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Options and Market Volatility.
Volatility is one
of the most important factors in an option's price. It measures
the amount by which an underlying asset is expected to fluctuate
in a given period of time. It significantly impacts the price of
an option's premium and heavily contributes to an option's time
value. In basic terms, volatility can be viewed as the speed of
change in the market, although you may prefer to think of it as
market confusion. The more confused a market is, the better chance
an option has of ending up in-the-money. A stable market moves
slowly.
Volatility measures the speed of change in the price of
the underlying instrument or the option. The higher the
volatility, the more chance an option has of becoming profitable
by expiration. That's why volatility is a primary determinant in
the valuation of options' premiums. There are options strategies
that can be used to take advantage of either scenario.
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securities has potential rewards, and it also has potential risks
involved. Trading may not be suitable for all users of this Website.
Analyst research available through this Website does not constitute a
recommendation or a solicitation any particular investor should purchase
or sell any particular securities. Past performance is not necessarily
an indication of future performance. You absolutely must make your own
decisions before acting on any information obtained from this Website.
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