Definition of Volatility Risk
What is Volatility Risk
Volatility risk is the risk or probability of a change in price due to changes in volatility. Option prices are influenced by changes in volatility. Vega is the measurement of an option’s price sensitivity to changes in the volatility of the underlying security.
Glossary of Terms and Phrases
A financial dictionary or glossary is an essential tool to better understand the meaning of a specialized term or phrase. It would obviously make life much easier if everyone spoke the same language and used the same financial terms and phrases but that is not realistic.
We learn new languages to communicate with each other, transact business globally and to appreciate other cultures. Global finance is a specialized language that if understood and mastered, it will provide benefits that help to decrease risk and improve investment returns. Financial literacy is the foundation of developing good investment strategies and sound decision making.