vol lingo

aristidis · August 11th, 2004, 3:14 pm

Hello all.i have a "street terminology" question.As we all know Vega=Dprice / dimplied VolWhen someone says that a trade would loose 1mi euros if vols rise by 2 vegas,what do they mean?How does the change expressed in vegascorresponds to change in implied vols?

apine · August 11th, 2004, 9:55 pm

change in vega = change in vol. so if vol is 20% and rises 2% to 22%, the trader you mentioned would lose 1mi euro. where i am, it would usually be stated as, if vol rises 2 points.