# inverse of stock price [closed]

Is there any intuition to use 1/P (inverse of the stock price) as a factor of volatility?

$VOLT = \beta_1 * \frac{1}{P} + Res$

P.S: In a research paper, I found it's related to the market micro-structure, but I don't really know in which way they are related.

## closed as unclear what you're asking by LocalVolatility, Alex C, Quantuple, amdopt, GordonSep 27 '17 at 19:17

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• I might find a solution, but it seems very simple: if the prices are up we will have lower volatility ? any one can confirm that ? – mawchne Sep 23 '17 at 12:52

Re: high prices $\Rightarrow$ lower volatility
It's pretty common for high volatility to arise when prices are lowering. This is because prices lowering is a movement in the underlying, and thus increases vol. Volatility is generally not related to the actual price of the underlying - you would ideally like to normalize. $\frac{1}{P}$ could potentially be used for normalization.