How do you research stock options volatility?

Question

I recieved a great response on my other option questions but I need a little bit more on volatility.

Answer 1

You can get historical stock volatilities (HV) from

http://www.cboe.com/data/HistoricalVolatility.aspx

in numeric form. You can also look up the historical closing prices for the stock and calculate the historical volatility with a spreadsheet.

For the implied volatility (IV) of options, you can use the free tools at

http://www.cboe.com/TradTool/IVolMain.aspx

or

http://www.ivolatility.com/

For the IV of a particular option use an options calculator such as the ones at the sites above.

If you are going to be actively trading options you may also find it worth your money to get the premium services from those sites.

There are also software packages such as OptionVue that cost thousands of dollars and are probably only worthwhile if you are going to trade options nearly full time.

At least as important as researching volatility is knowing which positions will benefit if your projections about future volatility are correct. I would recommend reading a good book about options, such as "Options Volatility & Pricing" by Sheldon Natenberg.for more information.

Answer 2

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Answer 3

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Answer 4

It doesn't take much research. Just look up the Beta on the stock and that will give you an indication of it's volatility. The higher the Beta the more volatile the stock

Answer 5

Option volatility is based on the volatility of returns of the underlying stock.

The beta may give an indication of volatility, but beta is a relative measure of risk in relation to how risky a stock compared to the stock market. In addition, "beta" or market risk does not include the "diversifiable"/unique risk that belongs to a firm.

When we talk about volatility in finance, we typically are referring to the standard deviation of returns. If you calculate the daily returns for a stock (which can be approximated by calculating natural log of price on day t / price on day t -1) over a year or several years, then you can calculate the standard deviation of daily returns from this. To "annualise" the standard deviation of returns from the standard deviation of daily returns, simply multiply the standard deviation of daily returns by the square root of 260 (the approximate number of trading days in a year).

Answer 6

this is substantial to undergo in techniques that techniques have a constrained lifetime, and if the inventory fee does not exceed the workout fee you lose each thing, while with buying the underlying inventory, you will nevertheless come out with something. you may lose funds if the inventory fee does not exceed the workout fee plus the top class you paid for the alternative plus fee. because of this, discovering a inventory option will in basic terms be equivalent to discovering a inventory for the purpose of short term effective factors, so some suggestions like what the business company sells is far less suitable, than in case you have been discovering to take a place interior the long - term. So the usefulness of suggestions, extremely relies upon on what or the kind you have been going to apply that suggestions. you besides mght could desire to contemplate: activity fee movements time till option expires and volatility different those issues can impact the fee of the alternative "top class" (fee somebody is prepared to pay for an option)

Answer 7

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