Value at Risk (VaR)
Value at Risk (VaR) measures the risk of loss on an investment or portfolio over a specified period. Based on the performance of the investment or portfolio over a given period, it estimates the likelihood of a loss of a certain magnitude over a given period. VaR is typically expressed as a dollar amount or as a percentage of the total value of the investment or portfolio.
In finance, vega measures how sensitive an option price is to changes in the volatility of the underlying asset. It is a Greek letter used in options pricing formulas to represent the amount by which the price of an option is expected to change in response to a 1% change in the volatility of the underlying asset. Vega is typically expressed as a percentage, and it reflects the impact that changes in volatility can have on the value of an option.
In finance, volatility refers to the amount of risk or uncertainty associated with the price of a security. It is a measure of how much the price of a security, such as a stock or bond, fluctuates over time. A security with high volatility experiences significant price changes over a short period of time, while a security with low volatility experiences less significant price changes. Volatility can be measured using a variety of statistical techniques, such as standard deviation or the variance of returns.
In finance, a volatility surface is a graphical representation of the implied volatilities of a group of options on a particular underlying asset, as a function of the options' expiration dates and strike prices. The volatility surface is used to help visualize the relationships between the implied volatilities of options with different expiration dates and strike prices, and can be used to model the expected volatility of the underlying asset over time.