Course Name: Options Trading Strategies In Python: Basic, Section No: 3, Unit No: 1, Unit type: Document
Hi,
I have a questions about the last paragraph in that document:
- "It can be seen from the graphs above that the asset with standard deviation of 2 has higher probabilities of occurrence for more extreme values…"
I cannot see any information about the stddev for the last three shown charts, I can only see the mean value equal to 2 in all these last three charts and thus this setence bugs me 
Cheers,
Gabriel.
Hi Gabriel,
The sentence refers to the previous three charts, where you have seen that even with the same mean, the investment gets riskier. To quote, "If the graph is stretched out further, it would mean that we are at risk of losing more money than that for an asset with a lower standard deviation with a lesser probability of
occurrence."
The document then draws a parallel from that graphical inference and presents a nemerical example "An asset with a mean 1.5 and standard deviation of 2 is a riskier investment than an asset with a mean of 1.5 and standard deviation of 1."
In the last paragraph, "It can be seen from the graphs above" refers to the graph's inference I just mentioned.
Hope this helps!
