What the market actually moved over the last 20 sessions. Sometimes mislabeled as actual volatility; the platform's term is Realized Volatility.
What is this volatility
Realized Volatility (Realized Volatility · RV) is the volatility that actually happened, measured from the price moves themselves: the spread of actual returns over a past window, annualized. It is the ground truth every forecast is measured against, and the second side of the risk premium equation.
It and implied: the judge and the forecaster
Implied is the market's prediction, paid for in advance, and realized is what reality ruled: a volatility seller wins when less is realized than was priced and loses when more is. Comparing the two continuously (the VRP premium) is the ledger for this entire craft.
Its window shapes its reading
Ten-day realized is nervous and catches the latest pulse, while three-month realized is calm and describes the whole season. Their crossover is a regime signal: the short one jumping above the long one means something changed just now, and the short one sleeping below it means the latest storm is cooling. A mature reading holds both windows together.
Hypothetical example
A stock with a one-month implied of 33% and a twenty-session realized of 21%: the market is paying for volatility that has not shown up yet. Either a known upcoming event justifies the gap, or it is a fat fear premium for whoever sells it. Opening the event calendar settles which, and that sequence (gap, then explanation) is the daily exercise.
Common mistake
Mixing it up with the implied figure in decisions: comparing today's implied with yesterday's implied measures a change in mood, while comparing it with realized measures whether the price is fair. The second is where profits are paid from.
Its window shapes its reading
Ten-day realized is nervous and catches the latest pulse, while three-month is calm and describes the whole season. Their crossover is a regime signal: the short one jumping above the long one means something changed just now, and the short one sleeping below it means the storm is cooling.
Where to see it on the platform
The volatility tools show it over several windows next to the implied figure, and the VRP indicator calculates the gap with a ready verdict.
The volatility tools show it over several windows next to the implied figure, and VRP calculates the gap.
