74 terms

Dictionary: V

Validator: A node that stakes capital to propose and attest to blocks on a proof-of-stake chain, earning rewards and risking slashing.
Valuation multiple: A price divided by a financial measure, used to compare what the market pays for a dollar of earnings, sales or cash flow across companies.
Value area: The price range containing roughly 70% of a period's volume, centered on the point of control.
Value area high: The upper boundary of the price range containing roughly seventy percent of a session's activity.
Value area low: The lower boundary of the price range containing roughly seventy percent of a session's activity.
Value at risk: The loss level a portfolio should not exceed over a set horizon at a set confidence - for example, 5% of capital over one day, 95% of the time.
Value averaging: A contribution rule that targets a growing portfolio value rather than a fixed contribution, so you invest more after declines and less, or sell, after gains.
Value date: The date on which the two currencies in a deal actually change hands, used across spot, forward and swap transactions.
Value factor: The tendency for cheap stocks, measured on ratios such as price to book or price to earnings, to outperform expensive ones over long periods.
Value stock: A stock trading at a low multiple of earnings, book value, or cash flow relative to the market or its own history.
Vanna: How delta changes when implied volatility changes — equivalently, how vega changes when price moves. The link between the skew and directional exposure.
Variable costs: Costs that rise and fall directly with the number of units sold, such as raw materials, freight and sales commissions.
Variable reward and dopamine: Unpredictable payoffs are the most habit-forming reward schedule there is, and trading is built on one.
Variance drain: The gap between average return and compounded return caused by volatility, which quietly removes wealth without a single losing average.
Variance ratio test: A test of the random-walk hypothesis that compares the variance of long-horizon returns to that of short-horizon returns scaled up.
Variance risk premium: The persistent gap between implied and subsequently realised volatility, which pays option sellers for absorbing other people's tail risk.
Variance swap: A contract paying the difference between realised variance of an underlying over a period and a fixed strike, giving direct exposure to volatility rather than direction.
Variation margin: The cash actually moved between accounts each day to reflect gains and losses on open futures positions.
Vault: A contract that takes deposits and runs a yield strategy on the depositors' behalf, issuing a share token that appreciates as the strategy earns.
Vectorised backtest: A backtest computed as array arithmetic over the whole history at once: signals times forward returns. Fast, easy to write, and easy to make wrong.
Vega: How much an option's price changes for a one-point change in implied volatility.
Vega convexity: The curvature of a position's response to volatility; convex positions gain more from a volatility spike than they lose from an equal fall.
Velocity logic: A CME mechanism that pauses a futures market for seconds when price moves through too many levels too quickly.
Velocity of money: How often a unit of money is spent in a year, defined as nominal GDP divided by the money stock; the term that makes the quantity theory of money hold as an identity.
Venture capital: Equity investment in early-stage private companies, where most investments fail and a small number of large successes are expected to carry the whole fund.
Verbal intervention: Officials talking a currency up or down with pointed language about the exchange rate, without spending any reserves, often as a warning before real intervention.
Vertical spread: Buying one option and selling another of the same type and expiration at a different strike, capping both risk and reward.
Vesting cliff: A period during which allocated tokens release nothing at all, after which a large tranche unlocks at once and the rest streams.
Vintage year: The year a private fund makes its first investment or holds its first close, used to group funds that deployed capital into the same market conditions.
Visualisation: Rehearsing a scenario in detail beforehand so that when it happens, the response is recognition rather than improvisation.
VIX: A published index of the 30-day implied volatility of a broad US equity index, calculated from a strip of option prices rather than from any single option.
VIX futures: Cash-settled futures on the CBOE Volatility Index, $1,000 per index point, settling to a special opening calculation of SPX option prices on a Wednesday.
VIX futures curve: The curve of volatility futures prices across expirations; upward sloping most of the time and inverted when the market is frightened.
VIX options: Cash-settled options whose underlying is a VIX futures contract, not spot VIX; the single biggest source of confusion in volatility trading.
VIX settlement: The special opening quotation that volatility futures and options settle to, derived from an auction of index options on a Wednesday morning.
VIX term structure: The curve of VIX futures prices across expiries, normally upward sloping in calm markets and sharply inverted during stress.
Volatility: How much and how fast an asset's price moves, measured as the standard deviation of returns or with tools like ATR.
Volatility arbitrage: Trading the difference between an option's implied volatility and the volatility the underlying is expected to realise, with directional exposure hedged away.
Volatility clustering: The empirical fact that large moves follow large moves and calm follows calm. Volatility is predictable even where direction is not.
Volatility cone: A chart of the historical range of realised volatility at several horizons, used to judge whether current implied volatility is high or low in context.
Volatility contraction pattern: A base in which each successive pullback is shallower than the last and volume dries up, suggesting supply is being exhausted before a breakout.
Volatility decay: The erosion of a daily-reset leveraged or inverse fund's value in a choppy market, caused by compounding percentage moves off a changing base.
Volatility drag: The gap between a series' average return and its compounded return, which grows with volatility; losses need larger gains to recover.
Volatility ETP: An exchange-traded product holding volatility futures, giving equity-account access to volatility exposure along with the roll cost of the underlying curve.
Volatility ETP decay: The structural erosion in long volatility products caused by rolling futures down an upward-sloping curve, compounded by daily rebalancing.
Volatility expansion: A shift from quiet, narrow trading into wide ranges and larger daily moves, usually following a period of contraction.
Volatility futures: Futures on the forward value of the volatility index; the only direct way to trade VIX, and the building block of every volatility ETP.
Volatility of volatility: How much implied volatility itself fluctuates; high vol of vol makes options on volatility expensive and makes vega hedges unreliable.
Volatility roll yield: The gain or loss from holding a futures position as it converges toward spot; negative in contango, positive in backwardation.
Volatility skew: The tendency for downside strikes to trade at higher implied volatility than upside strikes in equities, reflecting crash risk and hedging demand.
Volatility smile: The U-shaped pattern of implied volatility across strikes, with both wings priced above the at-the-money level.
Volatility stop: A stop placed a multiple of recent volatility away from entry, so the distance adapts to how much the instrument normally moves.
Volatility surface: The full grid of implied volatilities across every strike and expiration on one underlying; the market's complete view of the distribution of future prices.
Volatility targeting: Scaling position size inversely with forecast volatility so the portfolio aims at a constant risk level rather than a constant notional.
Volatility term structure: How implied volatility differs across expirations for the same underlying; usually upward sloping in calm markets and inverted in stressed ones.
Volcker Rule: The Dodd-Frank provision restricting proprietary trading by US banking entities and limiting their sponsorship of hedge funds and private equity funds, with exemptions for market making and hedging.
Volmageddon: The February 2018 episode in which a volatility spike destroyed inverse volatility products in a single session, the standard cautionary tale of short volatility.
Volume: The number of shares or contracts traded during a given period.
Volume / open interest ratio: Today's contract volume divided by yesterday's open interest; a rough screen for series where new positioning is unusually heavy.
Volume bars: Bars that complete after a fixed number of shares or contracts trade, so each bar represents equal participation.
Volume climax: A bar or short sequence with dramatically higher volume than surrounding activity, usually at the end of a move rather than the start.
Volume dry-up: A stretch of unusually low volume during a consolidation, read as sellers having finished rather than as a lack of interest.
Volume profile: A histogram showing how much volume traded at each price level over a period, plotted sideways on the chart.
Volume vs open interest: Volume counts contracts traded in a session and resets daily; open interest counts contracts still held overnight and changes only when positions are opened or closed.
Volume weighted moving average: A moving average that weights each bar by its volume, so heavily traded bars pull the line more than quiet ones.
Vomma: The rate at which vega changes as implied volatility changes; it measures how much a position benefits from large volatility moves rather than small ones.
Vortex indicator: Two oscillating lines built from the distance between current highs and lows and the prior bar's opposite extreme, used to spot trend changes.
Vote escrow: Locking governance tokens for a fixed term in exchange for boosted voting power and rewards, with longer locks granting more influence.
Voting rights: The shareholder's right to vote on directors, auditors, mergers, and pay proposals, normally one vote per share of common stock.
VRO (VIX settlement value): The special opening quotation that VIX futures and options settle to, calculated from a single auction in SPX options on the Wednesday of expiry.
VVIX: The volatility of the volatility index — an index built from volatility index options, measuring how much the price of protection is itself expected to move.
VWAP (Volume-Weighted Average Price): The average price of the session weighted by volume at each price; the benchmark institutions use to judge their fills.
VWAP algorithm: An algorithm that trades in proportion to expected volume through the day, targeting the volume-weighted average price as its benchmark.
VWAP algorithm: Slicing an order in proportion to the expected volume profile of the day, so the fill tracks the volume-weighted average price.

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