The unique behavior of pre-announcement implied volatility — Options are intrinsically forward-looking contracts, so their prices should account for the uncertain stock price impact of an upcoming earnings release. Public companies routinely release summaries of their operations and performance, including income statements, balance sheets, and other reports. Such events are commonly referred to as earnings announcements.

Any option trader who focuses on volatility trading will tell you that the price of volatility is the single-most-important factor in trading volatility. That might sound intuitive to us, but it wasn't too long ago when implied volatility was merely a plug-number when we wanted to price an option (or…

Derivatives are financial instruments which derive their value from underlying assets such as equity shares, commodities , currencies , and interest rates. Futures and options are the two most commonly traded derivatives. Market volatility also plays a significant role in the trading of futures and options.It is imperative to understand…