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Variable Ratio Write – an options strategy in which a trader writes 2 or more options contracts for every 100 shares owned. Each option has a different strike price.
Vega – a measurement of how much an options price changes for a 1% change in the price of the underlying security.
Venture Capital – funds provided to startup firms and small businesses with high growth potential. This type of capital carries higher risks and higher expected returns than general investing in the stock market.
Vertical Spread – an options strategy which is also a spread where the options have different strike prices but the same expiration dates.
Volatility – a statistical measure of fluctuations in the value of a security or a portfolio of securities. Defined as the standard deviation of the percentage changes in the stock price on an annualized basis. Volatility is measured from a stock’s historic price data, and, unlike Beta, does not take into account changes in the market. The volatility of a market index like the S&P 500 tends to be around 0.18. A typical individual stock volatility would be around 0.30. Volatility is critically important to the pricing of options. The “implied volatility” of an option is the volatility term, given set figures for the other three terms (the price of the underlying security, the strike price of the option, and the time to maturity).
Volume – units of trading in a security or in the overall market for a specified period.