Part of the appeal of these instruments is in their structure, which can provide short-term traders with enough of a built-in edge to make some of the better-conceived volatility trading strategies all the more appealing.
But Dimon said reducing the volatility of trading and getting better results is one of his big priorities this year.
In times of high volatility, trading would revert to floor brokers.
But not the U.S equity market, with the VIX (the Volatility Index, a measure gauging future anticipated stock market volatility) trading at an astonishingly low level.
Traders suggest that the Fed's indication that it may be nearing the end of its cycle of interest-rate increases will probably make the volatility and trading volume jump even more.
Trading volatility is a great way to round out a swing trading strategy of buying markets after they have pulled back and selling them into strength.
Rapid-fire electronic trading made the former rule obsolete, but given the extreme volatility and record trading volumes of recent weeks, and the significant decline in shares of major financial companies, regulators are reconsidering it.
Trading volatility has become possible through vehicles based off the Chicago Board Options Exchange Market Volatility Index, or VIX for short.
Pomeranets and Weaver reviewed market quality to answer the following questions: Is a Robin Hood tax effective at reducing volatility and speculative trading?
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Markets across the region showed some volatility in early trading, but later shifted their attention back to the debt problems in Ireland and elsewhere.
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However, such a strategy at its debut can accelerate trading volatility as well as dampen institutional investors who seek stocks with high liquidity to trade.
Yet in an environment where option implied volatility is literally trading at a premium, the worth of the option has increased by more than six-fold in the space of three weeks.
"The ever-present threat of a far-reaching financial collapse from the worsening quagmire in Greece and Italy generated a raft of daily headlines that injected a high level of trading volatility, " it said.
This kind of record trading volume plus volatility can only have been the result of extraordinary high frequency trading by computer and the quant hedge funds, going in and out of Apple and IBM and big bank shares dozens of times a day.
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Today, I present some trading strategies that should take advantage of back and forth volatility assuming that our one-month old trading ranges persist.
Some 70% of all equity volume is driven by computer models that suddenly trigger a surge in buy or sell orders that are causing the fragmentation, volatility and use of hidden trading venues.
Late Friday, the SEC said in a statement that "exceptional trading volume and price volatility of the equity market over the last few days raise the potential of even greater challenges" during NMS' phase-in.
Trading aggressively to manage such volatility may create some fortunes, but it destroys many, many more.
Often during extended trading ranges, implied option volatility declines and the amount of time premium built into the price of the options of the security in question becomes very low.
The largest independent firm, LaBranche (nyse: LAB - news - people ) warned last week that it would miss first-quarter expectations, blaming low volatility and a higher percentage of program trading activity.
The problem, as with most short-term strategies, is developing a compelling trading strategy capable of predicting market volatility.
Capture the volatility in-between and take advantage of trading ranges while being cognizant of the trend for the stocks you are trading.
With April expiration now behind us, the CBOE Market Volatility Index (VIX) enters the week trading in the 15 area again, which has been a floor since December.
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In addition, procedures to halt trading if prices show too much volatility in a short period of time have been implemented since the flash crash occurred in 2010.
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Sundaram adds that since options trading is ultimately a bet on volatility, retail investors would probably have a difficult time estimating returns, since institutional investors don't have an easy time of it, either.
They find that in all three cases trading volume is positively correlated with higher volatility.
The Chicago-based options trading venue is the home to the volatility index, or VIX, but traders who deal in certain products were shut out Thursday morning as multiple planned re-openings came and went.
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As you can see on the chart below, when the VIX is at a discount or is trading at a small premium to historical volatility implying cheap portfolio insurance major short-term buying opportunities have occurred during the past several months.
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Worse still, higher trading volumes have also been associated with higher volatility.
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