Options Jive

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Volatility vs Price

Options Jive

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Price returns are roughly normally distributed while volatility follows a chi-square distribution. The main differences between the two are the tails...price returns are skewed a bit to the downside, while volatility has a large, noticeable upward skew. This means if vol goes up, it tends to shoot up and float down, where as price can go up or down with the same velocity (for the most part).

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