Volatility & Non-Linearity

Feb
19
What is a Linear Payoff? What is a Positively or Negatively Convex Payoff?

What is a Linear Payoff? What is a Positively or Negatively Convex Payoff?

Linear Payoffs In Trading & Investing, a linear payoff refers to a financial instrument or investment strategy where the return
1 min read
Feb
19
What is the MOVE (Merrill Lynch Option Volatility Estimate) Index?

What is the MOVE (Merrill Lynch Option Volatility Estimate) Index?

The MOVE Index, short for "Merrill Lynch Option Volatility Estimate," is a measure of market expectations for future
1 min read
Jan
24
How Can an Option Trader Hedge His Forward Risk?

How Can an Option Trader Hedge His Forward Risk?

When you trade Call or Put Options, the underlying asset is the Forward corresponding to the option maturity, not the
1 min read
Jan
24
Black-Scholes Model & Interest Rates

Black-Scholes Model & Interest Rates

We now know from our previous blog post how Options are priced using the Black-Scholes model (or more complex iterations)
1 min read
Jan
22
Call / Put Options & Black-Scholes Model

Call / Put Options & Black-Scholes Model

Options are financial derivatives that give the holder the right (but not the obligation) to buy or sell an underlying
2 min read
Jan
22
What Is the CBOE Volatility Index (VIX)?

What Is the CBOE Volatility Index (VIX)?

The VIX, or the CBOE Volatility Index, is a popular measure of market expectations for future volatility. It is often
1 min read
Jan
22
Implied Volatility vs. Historical Volatility

Implied Volatility vs. Historical Volatility

Implied Volatility (IV): This is a market-derived estimate of future volatility embedded in the current prices of options. It reflects