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, “Why are stock prices so volatile?” I think this comes down to a basic understanding of just the difference between individual company expectations and broad market dynamics or structure and expectations and so, today, I want to look at Tesla and say the S&P 500. And so, the S&P 500 broad market index comprised of 500 individual components, so naturally, when you start to see new stories or major market-moving events happen to one or two or three or five or even 10 of the individual components of the S&P, that market movement is going to be broadly neutralized or averaged out or smoothed out as you start to go all the way up the chain through the 500 components because the S&P’s price is not just that single company or that group of five or 10 companies. It’s 500. A big movement in five companies or 10 companies gets smoothed or averaged out when you look at th