FX & Gold Daily Volatility Update - Nov 9th 2015, 08:00 GMT
The following table provides volatility updates for major FX pairs and gold (XAU/USD) over a range of (at-the-money) option durations. Green indicates that volatility is rising and red indicates that volatility is falling.
What is volatility?
Volatility is a measure of how much a price fluctuates with no regard for direction. This is an important factor to consider when trading and may be useful when assessing risk and profit potential.
How to trade it?
Options are a useful vehicle to take advantage of price movement and changes in volatility. When you buy a Call or a Put you are speculating on upward or downward price movement, respectively, but you are also speculating on higher volatility. Since an increase in volatility increases the price of an option regardless of market direction. However, if you expect a market price to stabilize and volatility to decrease you may trade this by selling Call and Put options.
When you see volatility falling (red) it means the option (for the related duration) will be cheaper to buy and when you see volatility rising (green) it means option price is rising and hence a seller will receive more.
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