Calculating a Stock's Standard Deviation | Trading Data Science

How understanding standard deviation helps us better understand stock moves and the opportunities that we can trade to take advantage of these moves.

See more options trading videos: http://ow.ly/P0EmG

Today, on this segment of "The Skinny on Options Data Science", Tom Sosnoff and Tony Battista along with our own Dr. Data (Michael Rechenthin, PhD) explain the concept of standard deviation and how to easily use it with free online tools.

The term "standard deviation" is often mentioned when a stock makes a large move. e.g. 'the stock make a two standard deviation move'. This segment explains what that means, how it relates to historical volatility and how we can easily calculate standard deviation using free online tools.

Standard deviation quantifies the amount of variation within data, the larger the standard deviation, the larger the dispersion. We can look at a bell curve of a normal distribution with one, two and three standard deviation moves marked out along with a percentage of move that would fall within each (from the mean) up or down.

Takeaways:

Standard deviation can be used to better understand data.

We can calculate standard deviation of daily stock returns using free Google Sheets.

Historical volatility is the annualized standard deviation of price returns.

Math is the most feared four-lettered word around, even to Tom and Tony. Luckily the well dressed Dr. Data is here to show how to tame the beast and even use it to make money. Check out his segments on analysis and data manipulation to understand the reasoning behind our trades.

You can watch a new Skinny on Options Data Science episode live and check out all previous episodes everyday at http://ow.ly/EoyGW!

======== tastytrade.com ========

Finally a financial network for traders, built by traders. Hosted by Tom Sosnoff and Tony Battista tastytrade is a real financial network with 8 hours of live programming five days a week during market hours. Tune in and learn how to trade options successfully and make the most of your investments!

Subscribe to our YouTube channel: http://goo.gl/s2bAxF

Watch tastytrade LIVE daily Monday-Friday 7am-3:15pmCT: https://goo.gl/OTv3Ez

Follow tastytrade:
Twitter: https://twitter.com/tastytrade
Facebook: https://www.facebook.com/tastytrade
LinkedIn: http://www.linkedin.com/company/tastytrade
Instagram: http://instagram.com/tastytrade
Pinterest: http://www.pinterest.com/tastytrade/

Видео Calculating a Stock's Standard Deviation | Trading Data Science канала tastytrade