The Epidemiology of Volatility Transmission: Part 2

This is part 2 of a two-part series on how volatility transmission mimics the spread of infectious disease and how investors can use VIX-linked securities as either a left-tail risk hedge or a distinct, tradable asset class. Part 1 can be read here.

What is volatility? The word has a noble origin. The Latin volatilis has several meanings, included winged, flying, swift, and fleeting and is derived from the verb volare, to fly. In modern English, the word volatility is also concerned with movement, variation and risk. In science, an everyday word can be expropriated and given a very precise meaning. Finance is no different. The Black, Scholes and Merton options pricing model assigned a mathematical definition to stock market volatility. Since then, in the valuation world, volatility was often been defined as the standard deviation (the square root of variance) of the log of the changes in value (or price) over a specified time period.

Attend an “Epidemiology of Volatility” continuing education webinar. Financial advisors interested in learning more about The Epidemiology of Volatility are encouraged to attend a Little Harbor Advisors’ sponsored webinar on the topic. This program is accredited for one-hour of continuing education credit for CFPs, CIMAs, CPWAs & RMAs.