Volatility Charts

Last modified 11:19, 5 Nov 2012

Volatility Charts

Volatility is an essential part of any options trading strategy and understanding an option's volatility is important for all options traders. With Your SOFTWARE, you can view the implied volatility of an option class, as well as the historical volatility of its underlying security, to assist your analysis of an option strategy.

Before we begin looking at the Volatility Chart feature, it is important to understand what volatility is, and how it is used in options analysis. For more information, go to the Volatility Overview topic.

Click on the Options icon in the tool menu, and select Volatility Chart from the drop-down menu:

tolbutn_optionsvolchart.png

This will open the Volatility Chart work page.

The work page contains three sections: Volatility Chart, Price Chart for the underlying asset (its display is optional) and the Volatility Table.

ogvolatiltychart_pagewords.gif

Volatility Chart

Enter the code for the security that you wish to view volatility for, and then press the DoD butn_go-off.gif button or Enter on your keyboard.

The volatility chart includes a number of Historical and Average Implied Volatilities overlaid on the one chart.

Different periods can be used in the calculation of the different Historical Volatility plots.

Different periods and different groups of options are used for the Average Implied Volatility calculations.

volaltychart_ivhvplots.png

The labels in the top left of the chart pane identify each individual line on the chart and these can be adjusted through the Action menu's Configure View... command.

See Volatility Charts - Parameters and Appearance for more information on these settings.

Price Chart

The chart pane beneath the volatility charts contains a price chart for the underlying asset. Use the Price Chart Display Controls to determine if and where the price chart is displayed.

Hide / Show

In the bottom left margin of the work-page, there is a check-box controlling whether or not the Chart Price Data is displayed. Un-check the check-box to remove the price chart's display.

Separate Window / Overlay on Volatilities

If the Chart Price Data check-box is ticked, select Below to display the price chart below the volatility chart in its own separate window.

Select Overlay to superimpose the underlying security's price chart onto the volatility chart.

Price Chart Display

The price chart type (bar, candlestick, line, etc.) and other details of its display are controlled in the same manner as stand alone price charts. Refer to the Chart Series Properties topic.

Chart Display

The overall chart display for both the Volatility and Price Chart, or just the Volatility Chart if the price chart is not shown or overlaid, is controlled by the Chart Page Properties dialog box. Single right mouse click anywhere on either chart to open the Chart Page pop-up menu. Choose the first command in the pop-up menu, Chart Properties, to open the dialog box.

From this seven tabbed page dialog box the background color or color-scheme, axis placement or display, font size/color, compression intervals, and many other settings can be altered. For more information on these standard price chart page controls, go to the Chart Page Properties topic.

Volatility Table

The volatility chart enables you to view the movement of volatility over a period of time, the Volatility Table allows you to compare the Historical Volatility or Average Implied Volatilities, using the latest price data.

A full explanation of the table is contained in the Using Volatility topic.

Page statistics
743 view(s) and 5 edit(s)
Social share
Share this page?

Tags

This page has no classifications.

Comments

You must to post a comment.

Attachments