Options for Volatile Markets: Managing Volatility and Protecting Against Catastrophic Risk, Second Edition

CHAPTER 9

Volatility and Volatility Derivatives

Until recently, the challenge of even quantifying volatility, much less managing it, was focused on the one instrument that we know to be dependent on volatility—options. But, volatility has now become a focus in and of itself as a measurable, manageable, tradable entity. Some even view volatility as an asset class in its own right. Today's traders and portfolio managers would do well to take advantage of the volatility products that exist, for they not only give clues to market direction, they can often provide protection and facilitate hedging strategies in an even more efficient manner than conventional puts. We feel this area of listed derivatives is sure to continue expanding in the future ...