Historical Volatility (HV)
The actual measured volatility of a stock over a past period, calculated from historical price data — as opposed to implied volatility which is forward-looking.
Explained Simply
Historical volatility (also called realized volatility) measures how much a stock actually moved over a specific period. It's calculated as the annualized standard deviation of daily returns. Comparing HV to IV reveals whether options are cheap or expensive: if IV is much higher than HV, options are overpriced (good for sellers). If IV is lower than HV, options may be underpriced (good for buyers). This HV-IV spread is one of the most reliable signals in options trading.
How Tradewink Uses Historical Volatility (HV)
The AI compares current implied volatility to 20-day and 60-day historical volatility for every ticker. When IV significantly exceeds HV (IV/HV ratio > 1.3), the system flags premium-selling opportunities. When IV is below HV (IV/HV ratio < 0.8), it flags potential options-buying opportunities. This HV-IV analysis feeds into the TradeRouter's decision of whether to use stocks or options for a given trade.
Related Terms
See Historical Volatility (HV) in action
Tradewink uses historical volatility (hv) as part of its AI trading signal pipeline. Start getting signals that use this concept to find real opportunities.