Historical vs. Implied Volatility


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question 1 of 3

What's the main difference between historical and implied volatility?

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1. What does standard deviation attempt to measure?

2. What's an example of an upcoming event risk?

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About This Quiz & Worksheet

To be successful on these assessments, an understanding of historical and implied volatility is needed. You must also know about event risk.

Quiz & Worksheet Goals

Areas of focus include:

  • Stock type that has large levels of historical volatility
  • Upcoming event risks
  • What is measured via standard deviation

Skills Practiced

  • Reading comprehension - ensure that you draw the most important information from the lesson on volatility
  • Distinguishing differences - compare and contrast concepts from the lesson, such as historical volatility and implied volatility
  • Knowledge application - use you knowledge to identify the type of strategy a trader should use to make a profit if implied volatility seems too small on an option

Additional Learning

Learn more about volatility by completing the lesson titled Historical vs. Implied Volatility. Covered information includes:

  • The formula for measuring historical volatility
  • What a trader would do if implied volatility seems too high
  • Which type of volatility you'd consider when gauging the price of an option