Volatility
15 lessons in this track so far, in the order we suggest reading them.
Understanding Volatility
IntermediateImplied Volatility (IV)Implied volatility is the market's forecast of future movement, backed out from option prices. Learn how to read it, convert it to expected moves and use it.IntermediateHistorical and Realized VolatilityHistorical volatility measures how much a price actually moved, using past returns. Learn the standard formula, range based estimators and how traders use it.IntermediateIV Rank and IV PercentileIV rank and IV percentile show where implied volatility sits within its past range. Learn both formulas, how they differ, worked examples and how traders use them.IntermediateThe VIXThe VIX measures expected 30 day volatility of the S&P 500 from option prices. Learn how it is calculated, what levels mean, VIX futures and how traders use it.
Volatility Shape
AdvancedVolatility Smile and SkewImplied volatility differs by strike, forming a smile or skew. Learn the shapes in equities, FX and commodities, why they exist and how to measure skew.AdvancedVolatility SurfaceThe volatility surface maps implied volatility across every strike and expiry. Learn how it is built, what its shape says, how it is used and how it changes.AdvancedVolatility Term StructureThe volatility term structure plots implied volatility across expiries. Learn what upward and inverted curves mean, how events show up and how traders use it.AdvancedVolatility Surface DynamicsSurface dynamics describe how implied volatilities change when the underlying moves. Learn sticky strike, sticky delta and why hedges depend on them.
Trading Volatility
AdvancedVolatility TradingVolatility trading profits from the size of price moves, not their direction. Learn implied vs realised bets, the main instruments and how to manage risk.AdvancedVolatility Crush and ExpansionImplied volatility tends to rise before events and collapse after them. Learn why volatility crush happens, how to measure it and how to trade options around events.AdvancedSkew TradingSkew trading bets on changes in the implied volatility difference between strikes. Learn risk reversals, put spread structures, what drives skew and the risks.AdvancedTerm Structure TradingTerm structure trading bets on the slope of implied volatility across expiries. Learn calendar trades, VIX futures roll yield, event plays and their risks.AdvancedDispersion and Correlation TradingDispersion trading sells index volatility and buys volatility on its member stocks, betting on correlation. Learn the logic, implied correlation and the risks.AdvancedVolatility ArbitrageVolatility arbitrage trades the gap between implied volatility and a forecast of realised volatility with delta hedged options. Learn how it works and its risks.AdvancedVariance and Volatility SwapsVariance swaps pay the difference between realised variance and a fixed strike. Learn how variance and volatility swaps work, how they are priced and their risks.