IMPORTANCE OF IMPLIED VOLATILITY IN OPTION PRICE.............29.11.2013

Some traders mistakenly believe that volatility is based on a directional trend in the stock price. Not so. By definition, volatility is simply the amount the stock price fluctuates, without regard for direction.

As an individual trader, you really only need to concern yourself with two forms of volatility: historical volatility and implied volatility. (Unless your temper gets particularly volatile when a trade goes against you, in which case you should probably worry about that, too.)
Historical volatility is defined in textbooks as “the annualized standard deviation of past stock price movements.”

Implied volatility is not based on historical pricing data on the stock. Instead, it’s what the marketplace is “implying” the volatility of the stock will be in the future, based on price changes in an option. Like historical volatility, this figure is expressed on an annualized basis. But implied volatility is typically of more interest to retail option traders than historical volatility because it's forward-looking.


IMPLIED VOLATILITY AND OPTION PRICES :-

"Implied volatility is a dynamic figure that changes based on activity in the options marketplace. Usually, when implied volatility increases, the price of options will increase as well, assuming all other things remain constant. So when implied volatility increases after a trade has been placed, it’s good for the option owner and bad for the option seller.

Conversely, if implied volatility decreases after your trade is placed, the price of options usually decreases. That’s good if you’re an option seller and bad if you’re an option owner."

How to signify the Implied Volatility :- 

Implied Volatility in Case of Index Option

Implied Volatility in case of Stock Option

IMPORTANT INDIAN ECONOMIC DATA IS COMING TODAY 29.11.2013 IN THE EVENING............29.11.2013

IMPORTANT INDIAN ECONOMIC DATA WILL COME TODAY IN THE EVENING BETWEEN 6: PM TO 7:00 PM

1. INDIAN FOREX RESERVE :- International reserves are used to settle balance of payments deficits between countries. International reserves are made up of foreign currency assets, gold, holdings of SDRs and reserve position in the IMF.Usually includes foreign currencies themselves, other assets denominated in foreign currencies, and particular amount of special drawing rights (SDRs). A foreign exchange reserve is a useful precaution for countries exposed to financial crises. It can be used for the purpose of intervening in the exchange market to influence or peg the exchange rate.

PREVIOUS @ 283.57B

2. INDIAN BANK LOAN GROWTH :- Bank Loan Growth measures the change in the total value of outstanding bank loans issued to consumers and businesses. Borrowing and spending are closely correlated with consumer confidence.

PREVIOUS @ 16.40%

3. INDIAN GDP QUARTERLY (YOY) :- Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy's health.

PREVIOUS @ 4.4%
FORECAST @ 4.6% 

We are expecting GDP data will come more than forecast and this last GDP data in Congress Government.