Rate Vol

Discussion in 'Options' started by Real Money, Sep 2, 2024.

  1. Real Money

    Real Money

    Problem:
    So I'm looking to get some data on rate vol, and the ICE BofA Move Index is behind a paywall.

    Potential Solutions:

    (1) Use model volatility on rates ETFs -- e.g., build my own index using model vol for stuff like TLT, JNK, UBT, etc.

    (3) Use futures implied vol?

    (4) Calculate an implied interest rate from market prices, and then directly calculate it's variance using api or scripting software.

    (5) Something else better? (e.g. LiveVol, ORATS, CBOE, etc.)


    Solutions at different price points would be cool, "industry standard" talk would be cool.

    Thanks.
     
  2. 2rosy

    2rosy

    Cme quikstrike has that and more. Free
     
  3. "Industry standard" is a swaption vol matrix, from which you can build something like MOVE or use different vols separately. I am not sure where you'd get that if you don't have Reuters or Bloomberg.

    If I were in your shoes, I'd take implied vols for rate ETFs and convert them into normal vols. Alternatively, you can use SOFR options (regular and midcurves), but you'd have to adjust for the forward-forward aspect vs full tenor vols. Finally, I'd avoid bond futures vols since the underlying is somewhat fucked up (it's a whole different story)
     
    longandshort likes this.
  4. Real Money

    Real Money

    Care to clarify? Formula or equation?
     
  5. ETF IV is "bond price vol", volatility of the price of the underlying basket of bonds - so it's log-normal price vol. In general, for comparison purposes you want to think in terms of yield volatility in basis points, i.e. "normal" volatility. To get there, you want take bond price vol and divide it by mortified duration of the basket.
     
    longandshort likes this.