Higher volatility means an investment shows crazier price swings, while lower volatility means the investment tends to be smoother in price. The more volatile an investment, the riskier it generally is—because you have less certainty as to what the investment’s price will be in a week, a mo...
Both insurance contracts and options require payment of premium. Premium is high if the chance of the event is high, and low if the chance is low. For life insurance, premiums are higher for a 60 year old than a 20 year old. For options, premiums are higher for a highly volatile stock...
When they are willing to pay a higher price it means more uncertainty. When volatility is low, the VIX is low and when the market is more volatile, lifting the “fear” factor, the VIX is high. Investors plan to buy when the VIX is high and sell when it is low, but there are ...
The amplitude allows for an estimation of the volatility of a particular security. The larger the amplitude, either positive or negative, the more volatile the security is judged to be. The level of volatility can also denote the amount of risk present in a particular investment.1 What Constitu...
However, while this can magnify profits, it also increases the risk of considerable losses. Therefore, futures trading requires careful risk management and is generally more suitable for experienced investors. Futures Options Because the markets can be very volatile, direct investment in commodity future...
All RAM is volatile, which means any data that’s read or written is lost when the computer powers down. If you’re working on a project and don’t want to lose data from an unexpected power outage, then don’t rely solely on RAM. Instead, use long-term memory like an SSD or HDD...
Over the short term, the Fed tends to look at core inflation numbers that strip out volatile energy and food prices. But even core inflation would be affected if oil prices were sharply higher for an extended period because they trickle down into the cost of goods and services. "As a resu...
When volatility surrounding a security increases, the price of options contracts for that underlying asset tends to rise as well. That means paying a higher premium if you’re purchasing new options contracts for the security. If volatility is declining, you can end up with lower option prices....
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Risk takes on many forms but is broadly categorized as the chance an outcome or investment's actual return will differ from the expected outcome or return.