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 – “What causes market volatility?” Market volatility is simply caused by unknown factors in the market and that’s all there is. I think a lot of people try to overanalyze potentially what volatility means and how it’s derived and what causes it, but the simple reality is that when market participants are unsure of a future event, that could be a corporate earnings event, it could be an announcement from a government official, an election, anything that causes uncertainty, we start to see markets behave more volatile. Now, this doesn’t always mean that markets have to crash for volatility to go up. In fact, we’ve seen time and time again that markets can actually go up and implied volatility or market volatility can also increase as markets are rising. We’ve seen this not only in the commodity markets, but also in markets like emerging markets after elections or after big announ