Stock Market Volatility Soars During Political Turmoil, Impacting Investors Worldwide
The article discusses how stock market volatility can change unpredictably due to events like political turmoil. This unpredictability is captured by modeling volatility as a random process. By looking at historical data, it is clear that volatility tends to increase during uncertain times. This stochastic volatility model helps explain why options prices show a pattern known as the implied volatility smile.