Using Statistical and Implied Volatility in Trading

Using Statistical and Implied Volatility in Trading Presented by Stanley Dash, Vice-President of Applied Technical Analysis Most traders understand that volatility refers to measurements of the magnitude of price movements -- or whipsaws, depending on your perspective. Despite that common understanding, there are many ways to measure volatility. Statistical volatility refers to gauging volatility directly from the price movement of an asset. Alternatively, we can look to the options market to see the level of volatility that traders are pricing into options premiums, known as implied volatility. This Analysis Concepts paper discusses statistical and implied volatility and how to use them together to profile market characteristics.

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