> For the complete documentation index, see [llms.txt](https://help.za.velocitytrade.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.za.velocitytrade.com/desktop-application-for-windows/windows/trading-panels/option-master/volatility-lab.md).

# Volatility lab

Volatility lab tab is used for graphic analysis before starting to trade options:

![](/files/-MgF4GZna9tK12lNrfnU)

This tab allows plotting the "Volatility lab" which is considered as a totality of IV values for a specific option contract. Also, it is possible to plot "Volatility lab" graph according to actual market data and Vanna-Volga implied volatilities model.

See the blue chart for "Volatility lab" plotted according to actual market data and the red one for Vanna-Volga implied volatilities model on the chart below:

![](/files/-MgF4GZpvZwjMvunpsSq)

## **Vanna-Volga implied volatilies model calculation algorithm**

This model is plotted for selected option series and gets the following elemental parameters:

* Days to expire of selected option series – Days/365;
* Underlier price – can be Forward or Current last price, is calculated with taking into account interest rates.

If Forward price is selected in the settings, then Forward price is calculated this way:

Forward price = Current last price \* e^(M\*Days/365), where

M = Domestick rate/100 - Foreign rate/100;

* ATM strike – is a strike, value of which is the closest to a Current last price value;
* ATM IV – an arithmetic mean of ATM Call and Put strikes IV;
* D Call strike – is a Call strike, Delta absolute value of which is the closest to a Delta value in the settings![](/files/-MgF4GZr7hsgqH7eEp23); 
* D Call IV - D Call strike IV;
* D Put strike - is a Put strike, Delta absolute value of which is the closest to a Delta value in the settings;
* D Put IV - D Put strike IV;
* Strikes array of selected option series.

  These parameters are used in array’s model values IV calculation for selected option series.

  The calculated series are reflected on the Volatility lab chart.

**Chart settings menu**

In the Chart settings menu you can choose the Side, Visible series and Volatility models to be displayed on the chart:

![](/files/-MgF4GZtNk2Eci_ApnIZ)

In order to hide the Chart settings menu, press the button![](/files/-MgF4GZxro2S8BZL4vqc), this will result into the chart’s maximization.

* The drop-down list in the Side section allows selecting an option side (strikes) on which the "Volatility lab" will be plotted. Available strikes are Calls, Puts, Calls\&Puts:

![](/files/-MgF4GZyVzrH2_Zvyl8T)

* The section Visible series allows selecting series for "Volatility lab". Mark series as checked to get one or more "Volatility lab" graphs plotted on the chart:

![](/files/-MgF4GZzywVoLYhG0Fbk)

* Pressing![](/files/-MgF4G_-pnSGRZQoCeFK)

  allows to define graph’s thickness (from 1 to 10 px), and pressing![](/files/-MgF4G_0q33qP6BpyJD5)calls the dialog window for graph’s color selection:

![](/files/-MgF4G_1BeFA1_mmw8LJ)

Marking the option![](/files/-MgF4G_4fHuDDsW-Sw9c)as checked in the Volatility models section allows to plot Vanna-Volga implied volatilities model.

This graph can also get its individual parameters via thickness and color selection (![](/files/-MgF4G_6podwfKR1QAJB),![](/files/-MgF4G_9lCXY2XkvkXDj)).

* The drop-down list of the Option series section allows selecting an appropriate series for Vanna-Volga implied volatilities model:![](/files/-MgF4G_Ar5Cys_W0xqdv).

Be attentive to choose the same series for Vanna-Volga implied volatilities model as for “Volatility lab” graph plotted according to actual market data.

## Chart scaling

The chart view can be manipulated with the buttons![](/files/-MgF4G_D3l-49jFqAzY3), located in the buttom-right corner of the chart field:

* Pressing the button![](/files/-MgF4G_E2peNOPicLMyE)allows to zoom out of any random area of the chart;
* Pressing the button![](/files/-MgF4G_F9w5tpL2vPOWC)allows to zoom in to any random area of the chart;
* Pressing the button![](/files/-MgF4G_H1IxbTbbK8Vsv)

  allows to enable selecting any area of the chart for zooming in. Pressing this button again disables this option.

The chart view can be also manipulated with some additional options:

* Hovering the cursor over a chart’s dot + mouse wheel scrolling - allows zooming in to and zooming out of a chosen dot![](/files/-MgF4G_IR977C-vrDRjt)of any chart;
* Clicking + holding + moving the cursor on a random area of the coordinate plane![](/files/-MgF4G_JG3uMiv3Zs2-E)- allows to focus the chart view on this area of the coordinate plane;
* Clicking + moving the cursor on any area on the X or Y axis - allows to move on the left/right (X) or up/down (Y) on this area on the X or Y axis;
* Clicking + scrolling on any area on the X or Y axis - allows to zoom in to and zoom out of this area:

![](/files/-MgF4G_KSSNHgogQwRMW)