Volatility in the Futures Options Market

Volatility in the Futures Options Market

Most traders are familiar with market volatility as this is one of the determinants of the levels needed for option prices. Volatility is a way to measure the rate and the possible magnitude of the movement of prices of the underlying security or asset whether the trend goes up or down. Traders will have to pay for a higher premium if the volatility level is high and they may pay a lower fee for the premium if it is also lower. Traders will need the measure of the SV (statistical volatility) in order for them to be able to make calculations as to the market value of the option that they are considering.

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