Vega and Implied Volatility

  • Thread starter Thread starter TRAB
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2/24/12
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I'm so confused about volatility. When we are talking about vega and option trading, what volatility are we discussing and how is it measured? Is it subjective, meaning each trader sets volatility to what he thinks it is. How is the volatility related to vega any different than the volatility we use in the Black-Scholes formula.
 
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