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A measure of the variation in price over time. Also a measure of the risk of a financial instrument.
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What does it mean to be "long or short in volatility"?
The question is:
Is the call long or short in volatility when it is (deep) OTM? What is
the profile of the implied volatility?
I know that in that case the answer is "long". … Therefore you want the volatility to be low.
I don't understand what exactly this term means neither where it comes from. I guess it is related to volatility trading/arbitrage. …