Introduction Volatility term structure describes how implied volatility levels vary across different expiration dates for options on the same underlying asset. Understanding the dynamics of volatility term structures provides critical insights…
Introduction Volatility skew is an important options market anomaly that all traders should understand. It describes the difference in implied volatility levels between out-of-the-money (OTM) put and call options with the…
Volatility represents a foundational option and risk metric that measures price fluctuation over time. While volatility may seem like a simple statistic, there are intricacies and advanced modeling techniques that…
Scenarios Delta hedging can ensure that the option price is not affected by changes in the underlying asset price. Description Delta is a sensitivity indicator of options, representing the degree of…
Individuals trading options should familiarize themselves with a common options principle, known as put-call parity. Put-call parity defines the relationship between calls, puts and the underlying futures contract. This principle requires…