It seems likely that some clever traders with high-speed computers are able to multiply the volatility with huge amounts of money and additional leverage by buying long and short on alternate days.
Look around the financial world (see article) and, even after the recent adjustments, the days of low volatility, cheap money and ample liquidity seem far from over.
We observe larger deviations for in-the-money and out-of-money options where the first derivative of the implied volatility with respect to call price (known as the inverse vega) is sensitive.
Most Democrats have long said such a step would leave the elderly vulnerable to the volatility of Wall Street and divert money from debt reduction.
So a couple of days before the vote happened, we knew that whichever way the vote would go, there was going to be volatility that night, and when volatility happens, the price rises, the smarter banks make a lot of money, which is usually not the case for consumers.
Niederhoffer acknowledges that his aggressive investing style and his reliance on borrowed money increase the volatility of his returns and the likelihood that he will suffer a calamity.
Looking at the implied volatility of the stock's near-the-money April options, we find a definite bearish skew.
As Investopedia explains, the first VIX, introduced by the CBOE in 1993, was a weighted measure of the implied volatility of eight S&P 100 at-the-money put and call options.
He suggested that low market volatility was also a sign of a declining appetite for risk, because many big investors lost a lot of money in the first quarter.
"If their models are right, they're probably making lots of money, but I'm not sure if they're the ones to blame for the increased volatility".
Still, the decline of money market funds could be a good thing for a financial system that suffers from hazardous volatility.
