Understanding Volatility

Lesson /15
Understanding Volatility Sample Lesson

Volatility is one option-related topic that is often in the news. However, volatility is also one of the most poorly understood and badly explained concepts, even among people who purport to understand options. Volatility is such an important thing for option investors to understand, we have made it our mission to clear up the misconceptions and bring clarity to an often muddled subject.

The course…

  • challenges common assumptions about volatility,
  • teaches you the four types of volatility,
  • introduces you to the typical view of volatility held by ‘vol’ traders,
  • builds a new framework for considering volatility as a directional investor,
  • shows how to identify potentially profitable investments based on volatility / value mismatches,
  • teaches what the VIX really measures,
  • shows why the ‘common sense’ strategy for hedging using the VIX doesn’t work
  • offers information about VIX trading strategies that do work,
  • and covers advanced topics such as skew, the volatility surface, the term structure of volatility, and dispersion trading.

The snippet from the video you see above is from the lesson “VIX Futures” and introduces the concept of basis and basis risk.

Our goal in this course is to give you a sensible, accurate, and durable understanding about the vitally important topic of volatility. Whether or not you use options in your investments or in your investing practice, this mini-course will open your eyes to a completely new world — the world from the perspective of volatility.

Supplemental Resources