The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “How do you calculate daily volatility?” There’s actually two things we’re going to cover here. Daily volatility, we’re going to cover annual volatility and they’re actually pretty easy to do. Most broker platforms do this for you already, so you don’t really have to do anything on your end. You just have to know where the numbers are inside of your specific broker platform. But the formula for calculating daily volatility is simply by finding the square root of the variance of the daily stock price. You have all the daily stock prices. You basically calculate a variance between all of the different stock prices and then you take the square root of that to figure out the daily volatility. If you want to now turn this into an annualized number, you don’t just multiply this by the number of trading days. I think this is actually a little bit of a misconception. Most people think