There are no tuba players here. No drums. No oboes. Just a range or a band in which the shares of GE are trading. They’re a trading sardine, in fact. Buy them at 9 bucks, sell them at 11 bucks, and make a 2 dollar spread for a while as things are trading in that price band.
The band applies not just to stock, but to more commonly sold items. Life insurance for a healthy 30-year-old will trade in a band of about 60 bucks a month for a million dollar policy. Price bands matter to traders, and those who set derivatives prices—i.e. if the band is narrow, the volatility is low, so options on that security anywhere meaningful outside of its trading range will be cheap. But not as cheap as the oboe player’s spit cup.
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Finance: What is Volatility?77 Views
In finance allah shmoop what is volatility beta this thing
that's the symbol for volatility on the street we mean
the wall one not the mean one and it is
so commonly used that the in crowd members just say
beta when they're referring to volatility unless they're from tennessee
in which case they say you ve all y'all all
right so here's a siri's of stock prices stamped each
day that has lo ve all or low beta and
here's a siri's that has high beta dead man's pulse
versus rocky mountains Well what makes a stock volatile uncertainty
Think about it this way If everyone knew for sure
what a given stocks earnings would be for the next
ten years quarter by quarter and they also knew what
the overall markets average earnings would be in a few
other things like revenue growth and world conditions and we're
going to be war inflation there wouldn't be a lot
of guesswork The quote right unquote price today would be
thirty two dollars eighty three cents and the quote right
unquote rate of compounding would be eight percent in the
stock would slowly go up but this rate but in
non disney land riel life well nobody really knows much
of anything So stockcharts look like this and nerve endings
of wall street traders look like this Neither of them 00:01:19.771 --> [endTime] looked much like this chart So that's all you
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