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Forum Newbie
Group: Forum Members
Last Login: 7/19/2010 1:59:39 AM
Posts: 1,
Visits: 1
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Hi Steve,
I am new to options trading, prior to options I have been trading the foreign exchange market exclusively and in particular the AUD/USD spot rate. I consider myself to be a chartist and have been quite successful in the past. However, In June 2010 I suffered a huge blow to my confidence in trading when I lost a total of 20% of my trading capital in 2 days. Ever since then I have postponed my trading and am trying to learn of ways to manage my risk more effectively and I am intrigued to the use of options to transfer risk. I was just wondering, how do you obtain data on historical volatility and implied volatility? From what I have read, historical volatility is the actual volatility that coincides with the current price of the option, however, implied volatility is not as black and white as that. I was just wondering, is there any software or calculations that can assist me in determining an accurate implied volatility rate for a given option or is it more artsy and requires some estimations and guesswork?
Regards,
Marco Susilo
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Forum Guru
Group: Administrators
Last Login: 6/13/2011 7:57:49 PM
Posts: 54,
Visits: 375
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| Hi Marco, You are correct, historical volatility measures the actual underlying volatility that occurred over a given period of time. Implied volatility is calculated using option prices and helps measure future expectations for the underlying instrument. Implied volatilities will vary over different months and also different strike prices in similar months. The term "options skew" measures the variance between different months and strikes. FX Options skew is readily available at FXoptions.com for all of the ISE pair values. If you want to learn more about options skew you can watch one of the previously recorded ISE educational webinars that focused on FX options skew. Please visit www.ise.com/archives for more information. Steve Meizinger
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