Because for most investors, except for bull market and bear market, the futures market is in a state where the price trend cannot be distinguished or the price has not changed much. At this time, the trading strategy can be subdivided according to the size of market fluctuations. As a unique attribute of options, volatility trading is favored by investors. And generally speaking, forecasting volatility is more certain than forecasting price, so many professional investors are more willing to deal with volatility risk.

1. In the financial market, volatility is used by investors to measure the severity of asset price fluctuations, and asset price fluctuations essentially reflect the risks contained in assets, so volatility is often used as an indicator to measure asset risks and is used for asset risk management.

2. Volatility is generally divided into historical volatility, realized volatility, expected volatility and implied volatility. Historical volatility is based on statistical analysis of the past (such as standard deviation) and assumes that the future is an extension of the past. Realized volatility is generally calculated based on the high-frequency data of the day. Forecast volatility The volatility calculated based on models (such as GARCH model) and historical data is used as the future forecast value. Implicit volatility is the volatility value that brings the option transaction price into the option pricing model and deduces it in the opposite direction.

1. Volatile funds usually adopt directional, arbitrage or portfolio trading strategies. Among them, directional strategy can predict the trend (increase or decrease) of implied volatility of specific assets; On the other hand, arbitrage strategy looks for profit opportunities in the prices of multiple options (or tools that imply option risks). Volatility arbitrage position is usually sensitive to implied volatility and actual volatility level, interest rate level and issuer's stock valuation. Therefore, the directional strategy is directional trading. In the direction of trading, whether it is long or short implied volatility, it can bring benefits to fund managers. For option traders engaged in volatility arbitrage, option contract is a speculative means to the volatility of the underlying assets, rather than a targeted investment in the price of the underlying assets.

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