How to calculate volatility and sharpe ratio ?

Here are six simple steps for calculating volatility.

And this is how you calculate Sharpe Ratio. 

The best way to find volatilty is to survey brokers of the instrument you're trading and see at what volatility level they are pricing their options.

The other ways are:

1. Look in the recent past quoted prices and apply some math to find the volatilty.  This method is not good to predict market shock, as you base your calculation on past values.

2. From options' quoted price find the implied volatility using B&S formula.  This method is good for At-The-Money options, as the B&S formula is not accurate for far In-The-Money or Out-of-The-Money options.

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