Volatility has been described in recent times as being "one of the most important risk indicators that is available to market participants and observers". The delivery of targeted returns with low volatility may be the hope of all investors, but is not always a reality. This pathway will provide insight into the best models to understand volatility.
Watch all the videos and pass the test to obtain a certificate showing your completion of this Pathway. Certificates can be shared directly to your LinkedIn profile and social media accounts.
9 videos • 43 minutes
In the previous video, Abdulla explained how Monte Carlo is a way of modelling a probability distribution of returns or prices. In this video, Abdulla examines the nature of stock returns to come up with a formula that can be used in Excel to simulate the price paths.
Abdulla Javeri • 05:09
The Black-Scholes Merton option pricing model is the Nobel Prize winning formula that is used as the basis of pricing options. In this video, Abdulla will discuss option pricing without Black-Scholes and in doing so it will provide hints to understanding the more complex area of option Greeks which will be covered in the second video on this topic.
Abdulla Javeri • 05:08
In the first video on this topic, Abdulla discussed option pricing without using the Black-Scholes model but left a few unanswered questions. In this video, Abdulla will cover those remaining questions relating to the appropriate probability distribution to use, the volatility of the asset, how far away the spot is in relation to the strike, the forward price and the time to expiry.
Abdulla Javeri • 05:12