"Traders will revel in IVolatility.com's capacity for generating layer upon layer of volatility measures and comparisons."
March 9, 2002: Forbes ASAP
Bookmarks: Your Guide to Investment Connections
"IVolatility.com scores 8 out of 10 for design, 7 for ease and 10 for value."
February, 2001 Online Investor
What Works for Investors? You Tell Us! (www.thestreet.com)
By Jamie Heller Editor-At-Large
October 26, 2000
The Web Guide Four Online Tools to Help You Invest with the Big Boys (www.fortune.com)
September 18, 2000
You don't have to look too hard to find a personal finance Website that features investing tools. There's the ubiquitous stock tracker, the gizmo to calculate gains and losses, the charting basics. But if you want serious analytics--and we mean institutional-quality stuff you typically can get only from the big boys on Wall Street--then read on. We're talking about sites that offer complex risk analysis, option pricing, and volatility data. (In other words, newbies need not apply.) And best of all, three of the four are free.
Risk management. Confident that you've minimized the risk in your portfolio? If you want to sleep better at night, get a risk assessment at Riskgrades.com. It's the Website of Riskmetrics, a division of J.P. Morgan that was spun off in 1998. "The unprecedented growth in equity ownership and increasing market volatility make measuring and managing risk more critical than ever," says Ethan Berman, CEO of calculate a risk score for each individual asset you own, or for your entire portfolio. You can also do a "what if" analysis to measure the implications of a buy or sell transaction. Want a real eye opener? Use the Xloss feature, which measures the "extreme loss," or the amount an individual could lose on the worst trading days of the year.
Options pricing. Unless you're a whiz at binomial pricing models or Excel spreadsheets, analyzing options can be tough. Professional traders do it by analyzing volatility to help calculate prices. How? They compare a stock's historical volatility and its "implied volatility" (meaning the market's estimate of how active the stock will be over the next three months). If implied volatility is higher than historical volatility, then options on that stock are theoretically overpriced. That's where ivolatility.com comes in. It lets investors view a stock's current volatility, implied volatility, and historical volatility, and how all that correlates to the S&P 500. The basic site is free, but you can access advanced tools for $9.95 to $39.95, depending on what you need.
Technical analysis. Though sometimes considered a dark art akin to consulting the stars for investing advice, technical analysis is increasingly used to help figure out where a stock is likely to head. At Techrules.com, investors can get user-friendly technical charts and analysis on thousands of stocks from around the world, everything from the basic buy-and-hold model to the more complex Bollinger bands or linear-regression models. "Investors can get a confirmation of fundamental expectations and can test past performance before buying a stock," says Jorge Bolivar, CEO of Techrules.com.
Employee stock plans. According to the National Association of Stock Purchase Plans, ten million to 15 million Americans now own employee options. Problem is, human resource departments can do very little to advise employees on how to manage them (because of potential liability). As a result, more than 90% of option holders exercise and sell within the first year of investing, says Rick Schultz, CEO and founder of Optionwealth.com. "That's not always the best thing to do. You're cutting off the future growth inherent in options," says Schultz, who has assessed employee stock-option issues for a decade as a financial planner. The site costs $200 per year (free if your company signs on) and offers a variety of services, from getting the current "in the money" amounts to figuring out the best order of liquidation. There's also a service that notifies users of red-letter dates. The alerts, often some two years in advance, can remind you, for instance, that you can start taking advantage of some tax shelters that protect your assets. Who says all those e-mail notices are junk?
IVolatility Launch Seeks To Eradicate the Volatility Guessing Game (www.wallstreetandtech.com)
July 21, 2000
Until recently, options traders seeking to find market volatility data had to rely on basic data from market data vendors, Excel spreadsheet functions or, at times, their own arithmetic, unless they used a proprietary trading system equipped with volatility tools. New York City-based iVolatility.com, however, has recently made the process easier and more thorough with its Web site, www.iVolatility.com.
"Traders are dependent on a source for [volatility] information, or they have to have a system that can be able to calculate the numbers for them," Ravi Jain, president of iVolatility.com, says. "The problem in the equity derivative world is that there are so many stocks and so many options. Having to calculate this implied volatility number for all of them is a mammoth task."
The site offers options traders and individual investors the ability to view such figures as an individual stock's current volatility, implied volatility (IV), historical volatility (HV), IV for calls and puts, as well as its volatility in correlation to the S&P 500. The Web site also offers volatility rankings and an options calculator, available to the user upon registering. Users can customize the site to monitor favorite stocks as well. All data is based on end-of-day closing market quotes, but Jain says iVolatility.com plans to add intra-day figures, updated every 15 minutes.
Though the company originally planned to incur a monthly $20 subscription fee for using the Web site, Jain said it recently decided to offer www.iVolatility.com's basic services for free. However, he said that most likely in early August, the Web site would offer several advanced features for which users will have to pay extra. Features will include an advanced options calculator allowing the user to play strategies and combinations of trades, and the ability to place request data that fits certain parameters through custom filters. A later release, Jain added, will allow the user to monitor his or her portfolio using the site's data.
Jain explained that the power of the Web site lies behind its database. Currently, at each day's close, a market data provider feeds the quotes into iVolatility's SQL servers, where C++ algorithms and routines filter, clean and process the data. A standard binomial function run in reverse is used to calculate the IV. Afterwards, an iVolatility.com team manually scans the data for abnormalities that must be fixed. In some cases, Jain says, market data vendors do not figure in announced dividends or fail to update their data when a stock splits. Once the process is complete, the data passes to a server hosted by iVolatility.com that displays the active server pages.
Jon Najarian, president of Mercury Trading and founder of 1010WallSt.com, stressed the importance of volatility numbers in tracking particular stocks and markets, and he says iVolatility.com should thus be very useful for options traders. Currently, market data vendors, such as Track Data or Reuters, do provide volatility data, but it is usually less thorough, less "user-friendly" and more expensive when compared with www.iVolatility.com, he says. In addition, Najarian says, some proprietary trading systems, like Mercury's or Goldman Sachs', do provide such data, but few firms own systems with such capabilities.
"There really aren't very many sites that will tell you what the volatility is and what the historical volatility has been on the Internet," Najarian said. "Professional traders like me have them available to us through a variety of services, but most smaller investors don't want to pay $3,000 a month for the types of machines that we use to provide it."
In the past, traders following a stock's volatility were forced to download prices everyday, plug them into a matrix or an Excel spreadsheet that has the formula and then calculate the volatility. Najarian notes this process was time consuming and expensive if the trader wanted live quotes.
Currently, www.iVolatility.com has approximately 600 registered users, including buy-side, sell-side and individual investors. In addition, Jain says, the company is currently considering deals that will provide iVolatility data directly to investment firms' trading systems.
NEW VOLATILITY SITE SHIFTS STRATEGY TO INST'L CLIENTS. (www.financialnetnews.com)
June 5, 2000 VOL. V, NO. 23
IVolatility.com, a Web site developed by New York-based eGAR Technology, was intended to serve individual options traders, providing them with volatility analysis, but has shifted its focus to institutional players. At this point, many individuals are not sufficiently sophisticated in their thinking about options, said Ravi Kant Jain, president of eGAR Technology. iVolatility.com provides volatility information on all optionable stocks in the U.S., examining such factors as historical volatility and implied volatility. The site was originally designed with the individual investor in mind, said Jain, noting that the advent of the Internet has spurred the growth of options trading among individual investors. However, the company has found that institutions, such as hedge funds, options market makers and brokerage firms, have expressed greater interest in the product.
Jain noted that institutions might have been expected to develop a similar tool on their own. But the value iVolatility.com brings to the table is derived from its extensive database and independently developed algorithms, he said. eGAR is currently in talks with firms interested in licensing the tool, but Jain declined to be more specific because no deals have been finalized.
IVolatility.com, which launched May 15, will still be available to retail investors, who may access the service for free until December. Starting in January, the company will charge a monthly subscription fee, which is tentatively set at $20. And the company is talking to online brokerage firms that may wish to license the service on behalf of clients, Jain said. But its efforts to reach individual investors will be largely limited to partnerships with retail firms who pay eGAR an up front fee for the service.
|Adelle Waldman / Associate Reporter
Financial Net News / Institutional Investor Newsletters
tel: (212) 224-3385 / fax: (212) 224-3970
WEB SITE OFFERS VOL INFO ON U.S. STOCKS. (www.derivativesweek.com)
May 29, 2000 VOL. IX, NO. 22
A new Web site is offering users in both the over-the-counter and listed equity derivatives markets access to its database of historical and implied volatility data. Called I Volatility.com, the Web site provides volatility information for every optionable stock in the U.S., said Ravi Kant Jain, president in New York. It went live at the end of last month and will be free to use for a limited time.
Jain said the site's information gives users both a snapshot of the listed options markets and a view of where the market is skewed, as users can compare historical, implied and current vols on listed options and the Standard & Poor's 500 and Nasdaq 100 indices. This information is vital to end users and dealers in the OTC market because the listed options market-being the bigger and predominant market-serves as an indicator of the state and direction of the whole market, he explained.
I Volatility can also compute implied vols for baskets using its data and correlation numbers for users, but this would be on a case-by-case basis, said Jain. The site's other features include analysis and ranking of single stocks to show trading opportunities and an options pricing grid with theoretical values and deltas.
The Web site was launched because the partners involved in its funding and development felt that U.S. individual investors, with trading accounts of around USD150,000 or more, are becoming more savvy in using equity options. Jain noted that option trading by individual investors over the last two to three years is also growing, although not as fast as the company anticipated. But with the increased participation of individual investors in the option market, the site aims to provide tools to help them decide which would be a better call or put to buy or sell, or which stock option is overvalued or undervalued, explained Jain.
Since the site went live, the company also has been marketing to banks, hedge funds, market-makers and fund managers. Jain added the company is in talks with online brokers to reach individual investors. Jain asserted that I Volatility was not wrong regarding the sophistication of individual investors, just ahead of the game.
Jain was formerly managing director at FNX, a large vendor of trading and risk management systems. Prior to that, he headed forex and metal options trading at Republic National Bank of New York for 11 years in New York. I Volatility is the only site to offer historical implied vols, according to Jain. Other sites, such as Schaeffersresearch.com, only go as far as showing current and implied vols up to six months. Chris Johnson, quantitative analyst at Schaeffersresearch.com in Cincinnati, said the site is in the process of incorporating historical vols into its existing forms of options analysis.
Scott Fullman, v.p. and chief options strategist at Swiss America Securities in New York, said he has been using IVolatility.com for a month now and finds it useful as it offers information not provided by other sites.
Playing the Bounces
Option strategies for a volatile market
Where were you when volatility on your favorite stock hit an important high or low? A new Website called IVolatility.com mines volatility data to help identify mispriced options - and it's free.
Some volatility data on the Internet have been available for a while at no charge. Quote.com (www.quote.com), option veteran Larry McMillan's Website (www.optionstrategist.com/free/analysis/data/index.html) and many online brokers offer free volatility data. Bloomberg, Track Data and other vendors charge for that data.
I Volatility.com captures implied volatility (the market's estimate) for every past trading day and warehouses the raw data in a database. Tap that database and you can scan for a variety of opportunities based on historical and implied volatility changes, says I Volatility founder Ravi Jain, former global head of options and derivatives trading for Republic National Bank of New York. For now, I Volatility remains free. "We'll probably start charging by the end of the year", Jain says.
Traders watch for differences between a stock's historical volatility and implied volatility to recognize when a stock option is underpriced or overpriced. If the option's implied volatility is higher than the historical, the option is (theoretically) overpriced.