Use Implied Volatility to Discover Stock Price Expectations

In the previous article, What is Implied Volatility in Options?, we introduced implied volatility and how it is calculated. Implied volatility is one of the most important factors used to assess the affordability or the luxury of an option. The judgment of option traders and investors in determining their best buying and selling strategies for […]

What is Implied Volatility in Options?

In our article on the Black-Scholes formula, we explained that before the popularity of the Black-Scholes model, it was difficult for investors to evaluate whether an option was fairly priced. When the formula was developed, people became more confident with the idea that it is indeed possible to enter a perfectly hedged position. This is […]

What is Return on Risk?

In business ventures or investment planning, two things are always calculated by the capital holder: risk of the return and return on investment. The relationship between risk and return is inevitable. Let us define the two. What are Returns? Returns are usually quoted in percentage terms. They represent the gains or losses of a security […]