Volatility slots are a type of derivative product that allow investors to speculate on the volatility of a given underlying asset. The derivative allows the holder to receive payments based on the percentage change in the underlying asset’s price.
There are two types of volatility slots: forward contracts and options. Forward contracts allow investors to purchase a contract that will expire in X days that will give the holder the right, but not the obligation, to sell the underlying asset at X% above or below the current market price on or before the expiration date.
Option contracts are similar to forward contracts, but they give the holder the right, but not the obligation, to buy or sell the underlying asset at X% above or below the current market price on or before the expiration date. .
Volatility slots can be used in a variety of ways. Some people use them as a way to speculate on how volatile an asset will be over a certain period of time.
Other people use them as a way to hedge against fluctuations in their stock portfolio. Volatility slots can also be used as part of a trading strategy.
