V - Return to Index

V - Is the Commodity Futures Symbol which represents the October Delivery Month.

VADM - Is the Very Accurately Defined Maturity security. It is an accretion based or directed bond. The degree of call risk for a VADM is dependent on the bond structure to which they are linked.

Value at Risk - Is the methodology which measures the sensitivity of a portfolio or firm's position with parametric statistical techniques. It uses historical information to estimate the impact of various standard deviation events upon the value of the holdings and the associated impact on earnings.

Value Funds - Are mutual or hedge funds which invest in apparently undervalued companies. These companies on a quantitative basis may exhibit lower-than-average ratios, such as price/earnings, price/sales, or book value. Nevertheless, these stocks are viewed by participants as being bargain priced or value attractive.

VAR - See Value at Risk.

Variance - Is a measure of volatility, risk, or statistical dispersion. It is the square of the standard deviation.

The variance is calculated by:

  • computing the mean of the series
  • then taking the deviation or subtracting the mean from each observation,
  • square the differences or deviations for each observation,
  • and divide the sum of the squared deviations by the number of observations.

This computation is the precursor to the standard deviation. The standard deviation is calculated by taking the square root of the variance.

Variance, Finite - Refers to a statistic which is limiting or converges. This means that various samples of statistically acceptable sizes and samples across time exhibit relatively stable variances or standard deviations. This is an important assumption for many statistical analyses, particularly VAR (Value at Risk) methodologies. However, it may not apply during turbulent times. It must be used with caution.

Variance, Infinite - Refers to a statistic which is not limiting or does not converge. Increases in sample sizes do not improve the quality of the statistic. The number exhibits non-converging fluctutations over time. Additional tests are necessary to evaluate the behavior of variance and standard deviation. Infinite variance is not as stable as finite variance.

It should be noted that in both finite and infinite variance cases, a number is generated. The analyst does not see the traditional infinity symbol. However, the implications and applications can be significantly disparate.

Vega - Is the measure of change in an option given a change in the volatility. Theoretically, it measures the instantaneous change in premium to the instantaneous change in volatility. In practice, it tends to be viewed as the change in premium given a 1 percent in volatility.

Vega Risk - Refers to the monetary exposure for a change in volatility for an option. It might refer to a change from 6 to 7 or 6 to 5 percent depending on whether a party is short or long the option. Some participants breakdown the vega risks into finer gradients or decimals.

Verbal - Is the oral report or order given between the parties in a transaction. Verbal fills or order executions must be followed by written documentation of the transaction. This documentation is the confirmation.

Versus Purchase - Is the specific identification of securities to be paired as completed transactions for tax purposes. If securities are not identified as specifically purchased and sold, then the transaction defaults to First-In First-Out (FIFO).

Volatility - Is the annualized standard deviation of the natural logarithms of asset returns.

Volatility Trades - Are options strategies which seek to profit by increases in volatility, decreases in volatility, or stable volatility. These trades can include: Butterflies, Condors, Straddles, and Strangles.

Volume - Is the quantity of trading activity. Generally, it is viewed from the sell-side. This aspect is connected to the transaction reporting obligation being on the part of the seller. Some observers consider NASDAQ activity as being double counted, whereas other do not. Here, market activity occurs with market makers. Often they will purchase a position for immediate resale to another buyer. Therefore, the 100 shares of stock will be viewed as a total volume of 200 shares. The first 100 is when the stock went into the market maker's inventory, and the second 100 is when it went into the (second) client's portfolio.

VSP - See Versus Purchase.

Vulture Funds - Are investment vehicles which focus on acquiring properties which may be available due to financial distress. The properties themselves may not be damaged but the principal owners may be in immediate need of cash. Usually, the term describes investment activities in real estate or closely held companies which may not enjoy the liquidity benefits of an exchange listing.

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