Ravi Kant Jain - Putting Volatility to Work
Volatility is both the boon and bane of all traders — you can’t live with it and you can’t really trade without it. Most of us have an idea of what volatility is. We usually think of “choppy” markets and wide price swings when the topic of volatility arises. These basic concepts are accurate, but they also lack nuance. Volatility is simply a measure of the degree of price movement in a stock, futures contract or any other market. What’s necessary for traders is to be able to bridge the gap between the simple concepts mentioned above and the sometimes confusing mathematics often used to define and describe volatility. But by understanding certain volatility measures, any trader — options or otherwise — can learn to make practical use of volatility analysis and volatility-based strategies. We’ll explore these volatility calculations and discuss how to use them.