Variance swaps are over-the-counter financial derivatives that allow investors to hedge their exposure to the magnitude of possible price movements of underliers, such as exchange rates, interest rates, or stock indexes. [Wikipedia: Variance Swap](https://en.wikipedia.org/wiki/Variance_swap)

Variance swaps are over-the-counter financial derivatives that allow investors to hedge their exposure to the magnitude of possible price movements of underliers, such as exchange rates, interest rates, or stock indexes. They offer direct exposure to the volatility of an underlying asset without the path-dependency issues associated with delta-hedged options. Variance swaps give investors a payout equal to the difference between realized variance (the square of the standard deviation) and a pre-agreed strike level.

Corporate Finance Institute-Variance Swap

Risk.net-Variance Swap

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