Price Volatility Specification
Definition
Price Volatility Specification. The specification of an option price in terms of its volatility, that being a measure of the variability of the price of the transaction over which the beneficiary of the option has control.
In reality a volatility (used to calculate the fair value of an option) is a measure of the variability of the price of the transaction over which the beneficiary of the option has control. This is the primary parameter passed into an option valuation (eg Black-Scholes, Binomial) Notes origin:NAB
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