The Skinny On Options Data Science

Quantifying a Move: Standard Deviation

The Skinny On Options Data Science

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

Today, on this segment of "The Skinny on Options Data Science", Tom Sosnoff and Tony Battista along with our own Dr. Data (Michael Rechenthin, Ph.D.) explain the concept of standard deviation and how to easily use it with free online tools.

The term "standard deviation" is often mentioned when a stock makes a large move eg., 'it made a two standard deviation move'. This segment explains what that means, how it relates to historical volatility and how we can easily calculate standard deviation using free online tools.

Standard deviation quantifies the amount of variation within data, the larger the standard deviation, the larger the dispersion. We can look at a bell curve of a normal distribution with one, two and three standard deviation moves marked out along with a percentage of move that would fall within each (from the mean) up or down.

Takeaways:

Standard deviation can be used to better understand data.

Historical volatility is the annualized standard deviation of price returns.

Watch this segment of "The Skinny On Options Data Science" with Tom Sosnoff, Tony Battista and Dr. Data (Michael Rechenthin) for a simple explanation of standard deviation and how to utilize it with free online tools.

The Skinny On Options Data Science More installments

See All »

Latest tastytrade Videos As of January 22

Most Shared From the last 30 days