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Currently studying about volatility, VIX and implied volatility as well as option pricing via stochastic volatility models. My question is how these are used in real life except of speculation. Do they play a role in hedging and risk management? Asking because I am about to choose a research topic on volatility and it's connection to risk management

Relevant papers or recommendations are welcomed.

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  • $\begingroup$ Yes, they play a role. Every risk manager strives to shield their portfolio from unexpected/unwanted volatility. Some methods of attempting to hedge off that risk involve the use of VIX, VIX futures, VIX options or other 'volatility geared' products (SVXY, UVXY, etc.) $\endgroup$ – amdopt Mar 8 '18 at 15:05

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