# Volatility

Volatility drives every cost of LPing: the more a price moves, the more an LP loses to arbitrage and the more often a range has to be re-centred. rangebound uses the most cautious of several measurements.

## The measurements

All yearly rates.

| Measure | What it is |
|---|---|
| RV 1h, 1d, 5d | Realised volatility of the listed underlying from 5-minute returns during US market hours |
| RV 20d | Realised volatility from the last 20 daily closes |
| IV 30d | Implied volatility of the underlying's at-the-money options about 30 days out |
| On-chain RV 24h, 7d | Realised volatility of the token's own pool price, around the clock |

Session realised volatility ignores the overnight gap, so outside US hours it describes the last session. On-chain realised volatility fills that gap: it comes from the pool itself, 24/7, so an overnight sell-off in the token raises it even while the stock is closed.

## The volatility in use (σ)

```
σ = the largest of: IV 30d, RV 5d (session), on-chain RV 7d
```

Taking the largest makes the costs conservative. The source used is shown next to σ wherever it appears, for example **σ 34% · IV**.

One-day readings don't set σ. Instead, when the last day's realised volatility is more than twice σ, the pool gets a **Vol spike** flag.

## IV against RV

```
IV / RV = IV 30d ÷ RV 5d
```

Above 1.5, options are pricing a bigger move than the stock has made recently, often ahead of earnings or news, and the pool gets an **IV ≫ RV** flag.

## Where you see it

The pool page's **Volatility** section shows every measure as a bar, highlights the one in use, and gives the resulting LVR for a full-range and a ±2% position.

## Caveats

- **Thin pools read high on-chain.** A trade pushes the price and arbitrage pulls it back, which looks like volatility. Five-minute sampling reduces this, but the thinnest pools can still read somewhat high.
- **No live reference overnight.** When the US market is closed, there is no traded underlying to check the token against.
- **Market data is unofficial.** Listed-market data comes from public sources, not an exchange feed.