Variance Swap
A type of volatility swap where the payout is linear to variance rather than volatility. Therefore, the payout will rise at a higher rate than volatility Investopedia Says:
Variance is the square of standard deviation. Because of this, a variance swaps' payout will be larger than that of a volatility swap, as these products are based upon variance rather than standard deviation. Related Terms:
Swap
Variance
Volatility
Volatility Swap |