The VolatilityAnalyzer

Everybody nowadays is talking about market volatility. For most of the people, volatility is an enemy that causes them to lose their money, but for experienced traders volatility is a Money Making Machine. They know how to analyze and predict future volatility behavior and also what option strategy to use in each situation. That's why we created the VolatilityAnalyzer, for it will give you the full capability to do "volatility trading."

One of the key patterns in volatility behavior is that volatility usually moves within a certain range, specific for the particular underlying. To spot the situations when volatility is reaching its highest or lowest levels and is ready to reverse itself, is a key to success.

It is also very important to analyze ratios between different types of volatilities, such as 5, 20, 50 and 100 day Statistical Volatilities. If you look through a number of volatility charts, you will notice the so-called "Rubber Band" effect, when the short-term volatility measure is rising (falling) above (below) the longer-term one and than snaps back to the level of the long-term one.

You may also have heard about Overvalued / Undervalued options. Simply, what this means is that the current option price is Greater / Lower than the Fair value of this option. The Fair value is usually calculated using Black-Scholes Pricing model. The main component of this model is Volatility. So now we get to the most difficult question: Which volatility should be used in a Fair value calculation? Some experts think it have to be 100 Day Statistical volatility, some are using 20 Day Statistical Volatility and some are saying that in fast moving markets even 10 or 5 Day Statistical Volatility should be used. In PowerAnalyzer we are use 20 Day Statistical Volatility, but what if you do not agree with us? Then the VolatilityAnalyzer is for you.

For all traders who want to use Volatility Based Trading, we created these unique tools, where YOU can set your own volatility ratios and where YOU can define which volatility history chart you want to analyze.

Take our FREE VolatilityAnalyzer tour and learn how YOU can take advantage of these tools.    

To take a Tour click here.