Trading options using implied volatility smile


Trading options using implied volatility smile


A:A volatility smile is a geographical pattern of implied volatility for a series of options that has the same expiration date. The first notable volatility smile was seen following the 1987 stock market crash.The pricing of options is more complicated than the pricing of stocks or commodities, and this is well-reflected in a volatility smile.

The volatility smile is so named because it looks like a person smiling. The more an option is in-the-money or out-of-the-money, the greater its implied volatility becomes. The relaa smileVolatility smiles are implied volatility patterns that arise in pricing financial options. The pattern differs across various markets. Never miss a trending story with yahoo.comas your homepage. Every new tab displays beautiful Flickr photos and your most recently visited sites.




Implied using options smile trading volatility

Trading options using implied volatility smile


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