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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: saveslivesbyday who wrote (7410)	5/17/2008 11:05:36 PM
From: Real Man	Read Replies (1) \| Respond to of 71475

I guess, you can say delta-hedged options sellers make money on volatility smile, the difference between implied volatility and realized volatility at expiration, so they have a good insentive to drive it lower. -g- Also, a simple formula r = beta - (sigma)^2/2, where sigma is volatility, gives your return. So, in some sense, as volatility gets higher, long-term return gets lower, and vice versa. The quant risk models are constantly perfected, computers can even model the crash, and derivatives are often driving the markets higher or lower short term... which makes a very different environment today from one 20-40 years ago.