The FX Volatility Market Comes Of Age

The 1973 paper by Black and Scholes on pricing financial derivatives led to an explosion in the volumes of traded options. It demonstrated that after hedging all dependence on the underlying asset, the main driver on the value of the option becomes its dependence on volatility. Today, volatility represents the price of the option and is traded increasingly in pure form that does not depend on the actual move of the underlying.