instruction
stringlengths
5
1.05k
output
stringlengths
6
22.3k
input
stringclasses
1 value
is volatility the same as risk
volatility is often used to describe risk but this is not necessarily always the case risk involves the chances of experiencing a loss while volatility describes how much and quickly prices move if increased price movements also increase the chance of losses then risk is likewise increased
is volatility a good thing
whether volatility is good or bad depends on what kind of trader you are and what your risk appetite is for long term investors volatility can spell trouble but for day traders and options traders volatility often equals trading opportunities
what does high volatility mean
if volatility is high it means that prices are moving both up and down quickly and steeply
what is the vix
the vix is the cboe volatility index a measure of the short term volatility in the broader market measured by the implied volatility of 30 day s p 500 options contracts the vix generally rises when stocks fall and declines when stocks rise also known as the fear index the vix can be a gauge of market sentiment with hig...
what is volatility arbitrage
volatility arbitrage is a trading strategy that attempts to profit from the difference between the forecasted future price volatility of an asset like a stock and the implied volatility of options based on that asset volatility arbitrage has several associated risks including the timing of the holding positions potenti...
how volatility arbitrage works
because options pricing is affected by the volatility of the underlying asset if the forecasted and implied volatilities differ there will be a discrepancy between the expected price of the option and its actual market price a volatility arbitrage strategy can be implemented through a delta neutral portfolio consisting...
what is volatility
volatility is a statistical measure of the dispersion of returns for a given security or market index it is often measured from either the standard deviation or variance between those returns in most cases the higher the volatility the riskier the security in the securities markets volatility is often associated with b...
how to calculate volatility
volatility is often calculated using variance and standard deviation the standard deviation is the square root of the variance since volatility describes changes over a specific period of time you simply take the standard deviation and multiply that by the square root of the number of periods in question
where
for simplicity let s assume we have monthly stock closing prices of 1 through 10 for example month one is 1 month two is 2 and so on to calculate variance follow the five steps below next take the square root of the variance to get the standard deviation this equals 2 87 this is a measure of risk and shows how values a...
when there is a rise in historical volatility a security s price will also move more than normal at this time there is an expectation that something will or has changed if the historical volatility is dropping on the other hand it means any uncertainty has been eliminated so things return to the way they were
this calculation may be based on intraday changes but often measures movements based on the change from one closing price to the next depending on the intended duration of the options trade historical volatility can be measured in increments ranging anywhere from 10 to 180 trading days volatility and options pricingvol...
what is volatility mathematically
volatility is a statistical measure of the dispersion of data around its mean over a certain period of time it is calculated as the standard deviation multiplied by the square root of the number of time periods t in finance it represents this dispersion of market prices on an annualized basis
is volatility the same as risk
volatility is often used to describe risk but this is not necessarily always the case risk involves the chances of experiencing a loss while volatility describes how much and quickly prices move if increased price movements also increase the chance of losses then risk is likewise increased
is volatility a good thing
whether volatility is good or bad depends on what kind of trader you are and what your risk appetite is for long term investors volatility can spell trouble but for day traders and options traders volatility often equals trading opportunities
what does high volatility mean
if volatility is high it means that prices are moving both up and down quickly and steeply
what is the vix
the vix is the cboe volatility index a measure of the short term volatility in the broader market measured by the implied volatility of 30 day s p 500 options contracts the vix generally rises when stocks fall and declines when stocks rise also known as the fear index the vix can be a gauge of market sentiment with hig...
what is the volatility ratio
the volatility ratio is a technical measure used to identify price patterns and breakouts in technical analysis it uses true range to gain an understanding of how a security s price is moving on the current day in comparison to its past volatility there are several different versions of volatility ratios the most commo...
the volatility skew is the difference in implied volatility iv between out of the money options otm at the money options atm and in the money options itm the volatility skew which is affected by sentiment and the supply and demand relationship of particular options in the market provides information on whether traders ...
also known as a vertical skew traders can use relative changes in skew for an options series as a trading strategy 1
why would volatility skew
volatility skew occurs due to the difference in implied volatility iv levels of options with different strike prices but the same expiration date the iv of an option is a measure of how much the market expects the price of the underlying asset to move the primary driver of volatility skew is the collective expectations...
what is implied volatility
implied volatility is a metric that attempts to capture the market s expectations of the future volatility of a security s price
what are the key differences between a volatility skew and a volatility smile
while both volatility skew and volatility smile relate to the iv across different strike prices they represent different market expectations and conditions the volatility skew typically reflects a greater fear of downside risk while the smile suggests a higher probability of large price moves in either direction
what is the key difference between a reverse and forward skew
the key difference between a reverse and forward skew is the direction of the skew a reverse skew reflects a market expectation of a large downward move that is higher iv for lower strike prices while a forward skew reflects a market expectations of a large upward move that is higher iv for higher strike prices
what are the common underlying securities when analyzing volatility
volatility analysis is a crucial part of financial markets and can be applied to a wide range of securities some of these securities include equities equity indices options futures foreign exchange fx bonds exchange traded funds etfs and mutual funds
are there any other ways to analyze volatility
there are several ways to analyze volatility beyond skew and smile patterns some ways include using historical volatility volatility indices generalized autoregressive conditional heteroskedasticity garch models volatility term structure volatility surface and the average true range atr the bottom lineanalyzing volatil...
what is a volatility smile
a volatility smile is a common graph shape that results from plotting the strike price and implied volatility of a group of options with the same underlying asset and expiration date the volatility smile is so named because it looks like a smiling mouth implied volatility rises when the underlying asset of an option is...
what does a volatility smile tell you
volatility smiles are created by implied volatility changing as the underlying asset moves more itm or otm the more an option is itm or otm the greater its implied volatility becomes implied volatility tends to be lowest with atm options the volatility smile is not predicted by the black scholes model which is one of t...
what is a volatility swap
a volatility swap is a forward contract with a payoff based on the realized volatility of the underlying asset they settle in cash based on the difference between the realized volatility and the volatility strike or pre determined fixed volatility level volatility swaps allow participants to trade an asset s volatility...
what is the volcker rule
the volcker rule is a federal regulation that generally prohibits banks from conducting certain investment activities with their own accounts and limits their dealings with hedge funds and private equity funds also called covered funds understanding the volcker rulethe volcker rule aims to protect bank customers by pre...
what was the goal of the volcker rule
the volcker rule s origins date back to 2009 when economist and former federal reserve fed chair paul volcker proposed a piece of regulation in response to the ongoing financial crisis and after the nation s largest banks accumulated large losses from their proprietary trading arms the aim was to protect bank customers...
what are the main criticisms of the volcker rule
the volcker rule has been widely criticized from various angles the u s chamber of commerce claimed in 2017 that a cost benefit analysis was never done and that the costs associated with the volcker rule outweigh its benefits 12 the fed s finance and economics discussion series feds argued that the volcker rule will re...
what was the glass steagall act
spurred by the failure of almost 5 000 banks during the great depression the glass steagall act was passed by the u s congress as part of the banking act of 1933 sponsored by sen carter glass a former treasury secretary and rep henry steagall chair of the house banking and currency committee it prohibited commercial ba...
what is volume
volume is the amount of an asset or security that changes hands over some period of time often over the course of a trading day for instance a stock s trading volume refers to the number of shares traded between its daily open and close trading volume and changes in volume over the course of time are important inputs f...
what does volume mean in stock
volume in the stock market is the amount of stocks traded per period
what is a good volume for a stock
traders usually have their own definitions of good trading volume it s best to do your research to determine your preferred volume or consult a trading or investing professional
how much is 1 volume in stocks
if a stock has a trading volume of one it means only one share was traded during the measured period the bottom linea stock s volume is the number of shares traded in a given period traders and investors use the metric to gauge the interest in a security to help them make trading decisions when trading volume is up whe...
what is volume analysis
volume analysis is the examination of the number of shares or contracts of a security that have been traded in a given period volume analysis is used by technical analysts as one of many factors that inform their trading decisions by analyzing trends in volume in conjunction with price movements investors can determine...
when pvi increases or decreases it means that price changes are being driven by high volumes conversely when nvi increases or decreases it means that prices are fluctuating with little effect from volume
calculating the positive volume indexif current volume is greater than the previous day s volume if current volume is lower than the previous day s volume pvi is unchanged if the current volume is less than the previous day s volume if the current volume is higher than the previous day s volume nvi is unchanged many in...
what is a volume discount
a volume discount is an economic incentive to encourage individuals or businesses to purchase goods in multiple units or in large quantities the seller or manufacturer rewards those buying in bulk by providing a reduced price for each good or group of goods volume discounts allow businesses to purchase additional inven...
how volume discounts work
the discounts can take on a variety of structures volume discounts are often tiered that is a specific discount is applied to x number of units within that tier the discount increases as for tiers that include larger and larger numbers of units for instance a discount could be applied to 50 to 100 units sold with a gre...
what is volume of trade
volume of trade is the total quantity of shares or contracts traded for a specified security it can be measured on any type of security traded during a trading day volume of trade or trade volume is measured on stocks bonds options contracts futures contracts and all types of commodities understanding volume of tradevo...
how volume of trade works
each market exchange tracks its trading volume and provides volume data the volumes of trade numbers are reported as often as once an hour throughout the current trading day these hourly reported trade volumes are estimates a trade volume reported at the end of the day is also an estimate final actual figures are repor...
what is a volume price trend indicator vpt
the volume price trend vpt indicator helps determine a security s price direction and strength of price change the indicator consists of a cumulative volume line that adds or subtracts a multiple of the percentage change in a share price s trend and current volume depending upon the security s upward or downward moveme...
what is the volume weighted average price vwap
the volume weighted average price vwap is a technical analysis indicator used on intraday charts that resets at the start of every new trading session it s the average price a security has traded at throughout the day based on both volume and price vwap is important because it provides traders with insight into both th...
how is vwap used
vwap is used in different ways by traders traders may use it as a trend confirmation tool and build trading rules around it for instance they may consider stocks with prices below vwap as undervalued and those with prices above it as overvalued if prices below vwap move above it traders may go long on the stock if pric...
what does the vwap tell you
the vwap can inform traders about a stock s liquidity and indicate at what price buyers and sellers agree traders can use it to monitor a stock s price movement throughout the day
why is the volume weighted average price important
vwap gives traders a smoothed out indication of a security s price adjusted for volume over time in addition it is used by institutional traders to ensure that their trades do not move the price of the security they are trying to buy or sell too extremely for example a hedge fund might refrain from submitting a buy ord...
is vwap a leading indicator
no vwap is not a leading indicator it is a lagging indicator because it uses historical data no real time data is used to calculate vwap therefore it only has specific uses and does not help traders who need up to the minute data the bottom linevwap is a technical analysis indicator used by traders during single tradin...
what is volumetric production payment
a volumetric production payment vpp is a type of structured investment that involves the owner of an oil or gas interest selling or borrowing money against a specific volume of production associated with that field or property the investor or lender receives a stated monthly quota often in raw output which is then mark...
what is voluntary accidental death and dismemberment insurance vad d
voluntary accidental death and dismemberment insurance vad d is a financial protection plan that provides a beneficiary with cash in the event that the policyholder is accidentally killed or loses a specific body part vad d is a limited form of life insurance and is generally less expensive than a full life insurance p...
how much the policy will pay in the event of a claim depends not only on the amount of coverage purchased but on the type of claim filed for example the life insurance policy might pay 100 percent if the policyholder is killed or becomes quadriplegic but it might only pay 50 percent for the loss of a hand or the perman...
types of ad d and exemptionsthere are four common types of group ad d plans offered certain death circumstances are excluded from many ad d policies including death by illness suicide non commercial radiation and natural causes death while under the influence of any non prescribed drugs or alcohol is also most likely e...
does not cover suicide self inflicted injuries overdoses or injuries due to certain risky behaviors
offers comparatively lower payouts than life insurancemay require extensive paperwork and investigation before receiving a payoutexamples of vad d insuranceaccidental death insurance varies widely by policy and jurisdiction some plans will also offer more complex benefits depending on the nature of the insured s death ...
what is a voluntary accumulation plan
a voluntary accumulation plan offers a mutual fund investor a way to accumulate a large number of shares over time by investing a manageable fixed dollar amount on a regular schedule usually monthly the small investor gets the opportunity to take advantage of the dollar cost averaging strategy many mutual funds offer t...
what is voluntary bankruptcy
voluntary bankruptcy is a type of bankruptcy where an insolvent debtor brings the petition to a court to declare bankruptcy because they are unable to pay off their debts both individuals and businesses are able to use this approach a simple definition of voluntary bankruptcy is simply when a debtor chooses to go to co...
how voluntary bankruptcy works
voluntary bankruptcy is a bankruptcy proceeding that a debtor who knows that they cannot satisfy the debt requirements of its creditors initiates with a court voluntary bankruptcy typically commences when and if a debtor finds no other solution to their dire financial situation filing for voluntary bankruptcy differs f...
when a corporation goes bankrupt either voluntarily or involuntarily there is a specific series of events that occur for all stakeholders to receive due payments this begins with distributing assets to secured creditors who have collateral on loan to the business
if they cannot fetch a market price for the collateral which has likely depreciated over time secured creditors can recoup some of the balance from the company s remaining liquid assets secured creditors are followed by unsecured creditors those who have loaned funds to the company i e bondholders employees who are owe...
what is voluntary bankruptcy
voluntary bankruptcy is a type of bankruptcy where an insolvent debtor brings the petition to a court to declare bankruptcy because they are unable to pay off their debts both individuals and businesses are able to use this approach a simple definition of voluntary bankruptcy is simply when a debtor chooses to go to co...
how voluntary bankruptcy works
voluntary bankruptcy is a bankruptcy proceeding that a debtor who knows that they cannot satisfy the debt requirements of its creditors initiates with a court voluntary bankruptcy typically commences when and if a debtor finds no other solution to their dire financial situation filing for voluntary bankruptcy differs f...
when a corporation goes bankrupt either voluntarily or involuntarily there is a specific series of events that occur for all stakeholders to receive due payments this begins with distributing assets to secured creditors who have collateral on loan to the business
if they cannot fetch a market price for the collateral which has likely depreciated over time secured creditors can recoup some of the balance from the company s remaining liquid assets secured creditors are followed by unsecured creditors those who have loaned funds to the company i e bondholders employees who are owe...
what is voluntary conveyance
voluntary conveyance refers to an elective transfer of title from one individual to another without adequate consideration consideration refers to compensation which is expected in return for the property without it the conveyor should be prepared to offer a legal explanation for the transfer understanding voluntary co...
what is a voluntary employees beneficiary association
voluntary employees beneficiary association veba is a type of mutual organization that provides life illness accident medical and similar benefits to members their dependents or their beneficiaries understanding vebaa voluntary employees beneficiary association veba can be established by employees or by an employer and...
what is a voluntary employees beneficiary association veba plan
a voluntary employees beneficiary association veba plan is a tax exempt trust set up by employers or a group of employees to cover the eligible medical expenses of its members their dependents or designated beneficiaries these plans are typically funded by the employer and are governed under internal revenue code secti...
how a veba plan works
vebas allow employers to provide benefits to employees on the condition that they abide by the following requirements 1vebas can cover a wide range of benefits eligible medical expenses are determined by the irs and each plan can vary in what it covers from this list and when payouts are made vebas are subject to some ...
when a veba plan is paired with a health savings account hsa veba dollars will be limited toward eligible dental and vision expenses until individuals meet their medical health plan deductibles
who is eligible for a veba to be eligible for a veba plan your employer must offer one also you must be an active employee and be covered by your employer s health insurance plan
is a veba an hra
health reimbursement arrangements hras allow employers to reimburse employees for certain medical expenses employees can roll over contributions year to year while investing contributions for growth under that definition a veba can be considered a type of hra
what is the difference between a veba and an hsa
health savings accounts hsas allow you to save for qualified medical expenses on a tax advantaged basis these accounts are associated with high deductible health plans the main difference between a veba and an hsa is how they re funded vebas are funded only by the employer in most cases while hsas can be funded with em...
what is a voluntary export restraint ver
a voluntary export restraint ver is a trade restriction on the quantity of a good that an exporting country is allowed to export to another country this limit is self imposed by the exporting country vers came about in the 1930s and gained a lot of popularity in the 1980s when japan used one to limit auto exports to th...
how a voluntary export restraint ver works
voluntary export restraints vers fall under the broad category of non tariff barriers which are restrictive trade barriers such as quotas sanctions levies embargoes and other restrictions typically vers are a result of requests made by the importing country to provide a measure of protection for its domestic businesses...
what is voluntary foreclosure
a voluntary foreclosure is a foreclosure proceeding that is initiated by a borrower who is unable to continue making loan payments on a property in an attempt to avoid further payments and prevent involuntary foreclosure and eviction borrowers may choose this option if their mortgage is significantly underwater this is...
what happens if you foreclose your own house
if you volunteer to willingly foreclose on your home your lender will allow you to surrender your home in exchange for canceling the mortgage debt you must agree to leave the home in good condition and move by a specified date when you voluntarily foreclose your credit will take a hit but you will control the terms for...
what is a deed in lien
a deed in lien is a voluntary foreclosure which is not the same thing as a foreclosure when you reach an understanding with your lender you hand over the property to avoid your lender from putting you into foreclosure
what is a voluntary lien
a lien is a claim that one person or other entity has over the property of another as security for the payment of a debt liens can be either voluntary or involuntary a voluntary lien is contractual or consensual meaning that the lien is created by an action taken by the debtor such as a borrower who obtains a mortgage ...
how voluntary liens work
a lien is a legal claim to an asset under certain conditions a voluntary lien is a type of lien that exists because you agreed to it or as a result of an action taken by you in contrast an involuntary lien is one imposed by law such as a tax lien that is initiated by the government for a failure to pay taxes 1
when there is a lien against your property you cannot legally sell it until you settle the amount you owe
liens apply to specific property not to you personally if you default on a debt the lien holder can take possession of the property in question for example a lender can take your home if you default on a mortgage you used to secure it or your car if you default on an auto loan
how voluntary liens are applied
voluntary liens are often used for mortgages to purchase real estate but they can also be used in many other types of financing such as car loans secured personal loans business loans credit agreements and even rent to own appliance transactions typically the physical property that the borrower is purchasing acts as co...
when the law gives a creditor the right to impose a claim on your property for an unpaid debt that is a statutory lien 2 one common type of statutory lien is a tax lien in which the government has the right to seize your property if you fail to pay a tax bill 1
a judgement lien occurs when a court rules that a lien should be placed on your property to satisfy your obligations to creditors for example if your insurance does not cover all of the damages you are responsible for in an accident a court might impose a judgement lien 3
do statutory or judgement liens affect your credit
involuntary liens can negatively affect your credit liens don t appear on your credit report but they are available through public records so potential lenders can learn about them in addition if the lien resulted from your failure to pay a bank or real estate loan those missed payments will be reflected on your credit...
what is a statutory lien
a statutory lien is one that is a result of the existing law and doesn t require your consent or a court judgement against you it can be used by creditors in an attempt to collect unsatisfied debts 4
what is a judgement lien
a judgement lien is a type of involuntary lien imposed on your property as a result of a court order judgment liens are typically issued after a creditor sues a debtor for an unpaid debt or other obligation and wins their case the bottom linevoluntary liens are common in many financial transactions and unlike involunta...
what is voluntary life insurance
voluntary life insurance is a financial protection plan that provides a cash benefit to a beneficiary upon the death of the insured it s an optional benefit offered by employers the employee pays a monthly premium in exchange for the insurer s guarantee of payment upon the insured s death 1employer sponsorship generall...
what is voluntary dependent life insurance
this employee benefit can cover a spouse children and any other eligible dependents depending upon the rules laid out in the plan in the event that a dependent dies the employee would receive the death benefit
is voluntary term life group insurance
yes voluntary life insurance is covered via a group policy put in place by an organization because of this most individual employees can purchase a policy under the umbrella plan without underwriting or a medical exam additionally the cost of the premiums will typically be less than for an individual policy
how much voluntary term life insurance do i need
while you may want or need a larger death benefit voluntary term life is usually limited by an employer to either 1x 2x the amount of your annual compensation other companies will set a cap at between 50 000 250 000 in coverage
what is the difference between group term and voluntary term life insurance
voluntary life insurance and group life insurance are often used interchangeably
what is a voluntary liquidation
a voluntary liquidation is a self imposed windup and dissolution of a company that has been approved by its shareholders such a decision will happen once an organization s leadership decides that the company has no reason to continue operating it is not a compulsory order by a court the purpose is to terminate a compan...
what is a voluntary liquidation
a voluntary liquidation involves the winding up of a company s affairs and the selling of its assets which funds the settling of its debts it results in the dissolution of the company who institutes a voluntary liquidation the company s ownership or board of directors must initiate the process but generally the decisio...
why would a company choose a voluntary liquidation
the reasons are numerous ranging from unfavorable business conditions that threaten the company s future to the loss of a key figure that the ownership does not think it can survive without the company may have been designed to be in business only for a set amount of time or for a specific purpose that has been fulfill...
what is voluntary plan termination
voluntary plan termination is the discontinuance of a defined benefit plan by an employer since an employer is not legally required to provide a retirement plan to employees it can terminate an established plan however an employer can terminate a voluntary plan only if all of the requirements for a standard termination...
voluntary reserve an overview
a voluntary reserve is a sum of cash that is held by an insurance company over and above any minimum required by government regulators state regulations set minimum reserve requirements for insurance companies that are intended to ensure they remain solvent voluntary reserves also known as additionally held liquid asse...
how a voluntary reserve works
state regulators use tools provided by the insurance regulatory information system iris which is managed by the national association of insurance commissioners naic to determine the solvency of insurance companies in their jurisdictions and the appropriate amount of cash they should have in reserve iris mines financial...
what is voluntary simplicity
voluntary simplicity is a lifestyle choice that minimizes the needless consumption of material goods and the pursuit of wealth for its own sake it is sometimes referred to as simple living the simple life or downshifting people embrace voluntary simplicity to create less complicated and more meaningful lives for themse...
what is voluntary termination
voluntary termination may refer to a variety of actions but most commonly it refers to an employee s decision to leave a job on their own accord it differs from a layoff or a firing in which the decision to end employment was made by the employer or another party rather than the employee voluntary termination can also ...
when submitting their resignation notice an employee can expect their supervisor to immediately forward it to human resources along with their intended end date and reason for leaving once human resources are involved the employee can expect to be asked to return company property to finalize and submit final expense re...
sometimes an employer facing downsizing will ask employees to voluntarily resign as this limits the number of layoffs that will be necessary employees that accept might be given a better exit package than those that are ultimately downsized special considerationsvoluntary termination can also be a reference to an indiv...
what is a voluntary trust
a voluntary trust is a type of living trust that is created during the lifetime of the trustor and is also known as an inter vivos trust in a voluntary trust the trustor retains the legal title of the gift transferred to the beneficiary even though the beneficiary has actual title and possession and ability to carry ou...
what is vomma
vomma is the rate at which the vega of an option will react to volatility in the market vomma is part of the group of measures such as delta gamma and vega known as the greeks which are used in options pricing understanding vommavomma is a second order derivative for an option s value and demonstrates the convexity of ...
what is voodoo accounting
the term voodoo accounting refers to a creative and unethical method of accounting that artificially inflates figures found on a company s financial statements voodoo accounting employs numerous accounting gimmicks to boost the bottom line by inflating revenue concealing expenses or both the individual accounting maneu...
how voodoo accounting works
as noted above voodoo accounting describes the tricks a company may use to hide its losses and inflate its profits the reason behind the name is simple profits and losses seem to magically appear and disappear using accounting gimmicks this process is not only unprofessional but it s also unethical that s because compa...
what is voodoo economics
voodoo economics is a derogatory phrase first used during the 1980 presidential primaries by george h w bush then a candidate to describe his opponent ronald reagan s proposals to reinvigorate the u s economy reagan won that election and his economic policies came to be known as reaganomics reaganomics was a policy tha...
what is supply side economics
supply side economics is a theory that maintains that increasing the supply of goods and services leads to economic growth that is businesses that aim to increase production need to spend money they hire more people expand factories buy more raw materials and find more outlets for their goods government officials who s...
what is demand side economics
demand side economics could be seen as the opposite of supply side economics demand side economics maintains that increasing the demand for goods and services is the key to economic growth a demand side economic policy might call for large scale government spending on infrastructure projects in order to increase relate...
what is the vortex indicator vi
a vortex indicator vi is an indicator composed of two lines an uptrend line vi and a downtrend line vi these lines are typically colored green and red respectively a vortex indicator is used to spot trend reversals and confirm current trends understanding vortex indicator vi the vortex indicator was first developed by ...
what is a vostro account
a vostro account is an account a correspondent bank holds on behalf of another bank these accounts are an essential aspect of correspondent banking in which the bank holding the funds acts as custodian for or manages the account of a foreign counterpart for example if a spanish life insurance company approaches a u s b...