Forward Volatility Agreement Sample Clauses

A Forward Volatility Agreement is a contractual arrangement in which two parties agree to exchange payments based on the realized volatility of a specified underlying asset over a future period. Typically, the agreement sets a reference volatility level, and at the end of the agreed period, the actual volatility is measured and compared to this reference; payments are then made depending on whether the realized volatility is above or below the agreed level. This clause allows parties to hedge or speculate on future volatility, providing a tool for managing risk associated with unpredictable price movements in financial markets.