Comments for VIX Trade http://vixtrade.com trade options on the vix index Tue, 22 May 2012 17:27:59 +0000 hourly 1 http://wordpress.org/?v=3.3.2 Comment on What is the relationship between volatility or beta and trading volume? by umdenstock http://vixtrade.com/what-is-the-relationship-between-volatility-or-beta-and-trading-volume/#comment-8703 umdenstock Tue, 22 May 2012 17:27:59 +0000 http://vixtrade.com/what-is-the-relationship-between-volatility-or-beta-and-trading-volume/#comment-8703 Beta is the mathmatical estimated variance of a specific stock or portfolio. It will always lessen with trading volume and diversification, this is why diversification is necessary in your portfolio's. More diversification means less risk. I always invest in the stock indexes since you do not have to pay the brokerage houses for there expertise in picking the stocks (mutual funds) for you and you still get the diversification. After all very few Mutual funds outperform the market as it is. Sorry, I have never heard of the GARCH method but my masters is in Financial Statement Analysis. Enjoy your research you'll actually miss it when you graduate, belive it or not. Beta is the mathmatical estimated variance of a specific stock or portfolio. It will always lessen with trading volume and diversification, this is why diversification is necessary in your portfolio’s. More diversification means less risk. I always invest in the stock indexes since you do not have to pay the brokerage houses for there expertise in picking the stocks (mutual funds) for you and you still get the diversification. After all very few Mutual funds outperform the market as it is. Sorry, I have never heard of the GARCH method but my masters is in Financial Statement Analysis. Enjoy your research you’ll actually miss it when you graduate, belive it or not.

]]> Comment on Where do I get a correct volatility measurement of a stock for an option calculator? by zman492 http://vixtrade.com/where-do-i-get-a-correct-volatility-measurement-of-a-stock-for-an-option-calculator/#comment-8706 zman492 Tue, 22 May 2012 06:19:28 +0000 http://vixtrade.com/where-do-i-get-a-correct-volatility-measurement-of-a-stock-for-an-option-calculator/#comment-8706 An option calculator will get the correct volatility. For example, using the calculator at if you fill in How much is the option price? (in $.c) How much is the stock price? (in $.c) What is the strike price? (in $.c) What is the dividend yield? (in percentages per annum) What is the interest rate? (in percentages per annum) Time left to expiration? and leave What is the volatility? (in percentages per annum) blank, then hit the "compute" button beside the space for the volatility, it will calculate the volatility for you. An option calculator will get the correct volatility. For example, using the calculator at

if you fill in

How much is the option price? (in $.c)
How much is the stock price? (in $.c)
What is the strike price? (in $.c)
What is the dividend yield? (in percentages per annum)
What is the interest rate? (in percentages per annum)
Time left to expiration?

and leave

What is the volatility? (in percentages per annum)

blank, then hit the “compute” button beside the space for the volatility, it will calculate the volatility for you.

]]> Comment on Do you consider volatility of the stock price when choosing stocks to swing trade? Do you have a system? by mrbarrakodrama http://vixtrade.com/do-you-consider-volatility-of-the-stock-price-when-choosing-stocks-to-swing-trade-do-you-have-a-system/#comment-8707 mrbarrakodrama Mon, 21 May 2012 18:22:45 +0000 http://vixtrade.com/do-you-consider-volatility-of-the-stock-price-when-choosing-stocks-to-swing-trade-do-you-have-a-system/#comment-8707 I mean how could you possibly be trading stocks if you don't consider how violitale they are? Let's say your stock gains 30% over night if it's not volatile how do you expect to sell it ? So yes it is a huge factor when it comes to stocks because without it you will have a hard time buying and selling I mean how could you possibly be trading stocks if you don’t consider how violitale they are? Let’s say your stock gains 30% over night if it’s not volatile how do you expect to sell it ? So yes it is a huge factor when it comes to stocks because without it you will have a hard time buying and selling

]]> Comment on How does momentum and volatility work together in the currency markets? by iraqisax http://vixtrade.com/how-does-momentum-and-volatility-work-together-in-the-currency-markets/#comment-8702 iraqisax Sat, 19 May 2012 23:34:38 +0000 http://vixtrade.com/how-does-momentum-and-volatility-work-together-in-the-currency-markets/#comment-8702 All the currencies used today by every country are in fact worthless. None of them have any backing. Their perceived value lies in their relative scarcity in comparison to other currency. Real money has real value. A hundred years ago, virtually all countries were using gold, or silver, or both for money. There were no exchange rates. An ounce of gold in London was equal to an ounce of gold in Berlin, or Rome. Politicians ticked people into accepting unbacked paper currency, which enabled them to steal the people's wealth through inflation. The rest is history. All the currencies used today by every country are in fact worthless. None of them have any backing. Their perceived value lies in their relative scarcity in comparison to other currency.

Real money has real value. A hundred years ago, virtually all countries were using gold, or silver, or both for money. There were no exchange rates. An ounce of gold in London was equal to an ounce of gold in Berlin, or Rome. Politicians ticked people into accepting unbacked paper currency, which enabled them to steal the people’s wealth through inflation. The rest is history.

]]> Comment on How is historical volatility useful when trading stock options? by David L http://vixtrade.com/how-is-historical-volatility-useful-when-trading-stock-options/#comment-8701 David L Sat, 19 May 2012 12:45:36 +0000 http://vixtrade.com/how-is-historical-volatility-useful-when-trading-stock-options/#comment-8701 HV measures past price movements while IV measures expected prices by means of estimates. Learning these two can actually help traders in knowing when and how to invest, thus gaining more profits. One of the most common types of HV is Statistical Volatility, where underlying assets and its value are determined over a definite period or number of days. 'Finite and Adjustable'- these are what SV naturally means, as time averages and momentum regarding options are being considered. As for IV or Implied Volatility, price movements are further identified using varied estimates. Meaning, these estimates refer to the expectations of market traders themselves. The so-called 'bid-ask' estimates are also considered in IV, where buyers and sellers may impact the value of said underlying assets. HV measures past price movements while IV measures expected prices by means of estimates. Learning these two can actually help traders in knowing when and how to invest, thus gaining more profits.

One of the most common types of HV is Statistical Volatility, where underlying assets and its value are determined over a definite period or number of days. ‘Finite and Adjustable’- these are what SV naturally means, as time averages and momentum regarding options are being considered.

As for IV or Implied Volatility, price movements are further identified using varied estimates. Meaning, these estimates refer to the expectations of market traders themselves. The so-called ‘bid-ask’ estimates are also considered in IV, where buyers and sellers may impact the value of said underlying assets.

]]> Comment on How is historical volatility useful when trading stock options? by John http://vixtrade.com/how-is-historical-volatility-useful-when-trading-stock-options/#comment-8700 John Thu, 17 May 2012 18:24:01 +0000 http://vixtrade.com/how-is-historical-volatility-useful-when-trading-stock-options/#comment-8700 I am always using this site everytime I have a question about options. I believe it will help you. Check out allmarketpicks.webs.com . And go to their learning center I am always using this site everytime I have a question about options. I believe it will help you. Check out allmarketpicks.webs.com . And go to their learning center

]]> Comment on What is the new volatility for an option when the underlying stock is acquired for shares in the acquirer? by zman492 http://vixtrade.com/what-is-the-new-volatility-for-an-option-when-the-underlying-stock-is-acquired-for-shares-in-the-acquirer/#comment-8704 zman492 Thu, 17 May 2012 15:19:03 +0000 http://vixtrade.com/what-is-the-new-volatility-for-an-option-when-the-underlying-stock-is-acquired-for-shares-in-the-acquirer/#comment-8704 The implied volatility (IV) would be that of the company that acquired the original company. At the time of the merger the existing contracts would be adjusted to make the underlying 60 shares of the new company since that is what the owner of 100 shares of the old company received. Calculating the IV should not be a problem since prices are usually per share, however you need to read the adjustment notice to see if the multiplier remained at 100 or was changed to 60. If the multiplier remained at 100 you would need to manually adjust the quotes. For example, a quote of $3.00 would have the following adjustment: $3.00 x 100 / 60 = $5.00 If you are not familiar with contract adjustments you can find plenty of examples at It could become a lot trickier since there are frequently limitations of some kind when such a choice is offered. If you know of some examples I suggest you look them up at the CBOE link I gave to see exactly how such adjustments have been done in the past. It would be a lot easier to answer given a specific adjustment notice, so if you see one that is of particular interest you might want to ask again referencing the specific notice. The implied volatility (IV) would be that of the company that acquired the original company. At the time of the merger the existing contracts would be adjusted to make the underlying 60 shares of the new company since that is what the owner of 100 shares of the old company received.

Calculating the IV should not be a problem since prices are usually per share, however you need to read the adjustment notice to see if the multiplier remained at 100 or was changed to 60. If the multiplier remained at 100 you would need to manually adjust the quotes. For example, a quote of $3.00 would have the following adjustment:

$3.00 x 100 / 60 = $5.00

If you are not familiar with contract adjustments you can find plenty of examples at

It could become a lot trickier since there are frequently limitations of some kind when such a choice is offered. If you know of some examples I suggest you look them up at the CBOE link I gave to see exactly how such adjustments have been done in the past. It would be a lot easier to answer given a specific adjustment notice, so if you see one that is of particular interest you might want to ask again referencing the specific notice.

]]> Comment on How is historical volatility useful when trading stock options? by James http://vixtrade.com/how-is-historical-volatility-useful-when-trading-stock-options/#comment-8699 James Wed, 16 May 2012 20:27:01 +0000 http://vixtrade.com/how-is-historical-volatility-useful-when-trading-stock-options/#comment-8699 Comparing implied volatility with historical volatility gives you an indication of whether extrinsic value is abnormally high. Some of these situations may be the run up to earnings release. Comparing implied volatility with historical volatility gives you an indication of whether extrinsic value is abnormally high. Some of these situations may be the run up to earnings release.

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