Word of the DayFutures Terms that begin "V"
Value-Added Monthly Index (VAMI)
VAMI is defined as the growth in value of an average $1000 investment. VAMI is calculated by multiplying (1 + current monthly ROR) X (previous monthly VAMI). VAMI assumes the reinvestment of all profits and interest income. Incentive and Management Fees have been deducted.
Value-At-Risk (VAR)
A widely used risk measurement technique that calculates (at a pre-specified level of probability) the loss that would be experienced in a day or some other pre-specified time horizon in the event of an increase in volatility or an adverse correlated move in market prices, assets or the investments making up a portfolio. At Man, the proprietary measure of VAR is also known as Total Portfolio Risk (TPR).
Variable Price Limit
A price limit schedule, determined by an exchange, that permits variations above or below the normally allowable price movement for any one trading day.
Vega
Coefficient measuring the sensitivity of an option value to a change in volatility.
Volatility
Volatility is the measurement of risk used most often in the investment industry. Put simply, it measures how variable price changes are in relation to the price trend for an investment. It is important to note that volatility says nothing about the direction of the trend itself. Expressed in slightly more technical terms, volatility is a measure of how much a set of returns for an investment deviates from the price trend or mean of that investment. It is usually calculated as 'standard deviation' and expressed as 'annualized volatility' - the standard deviation on a yearly basis.
Volume
The number of contracts bought or sold during a specified period of time. This figure includes liquidating transactions.
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