Perhaps it would alter your perception to know that many large derivatives are valued using end-of-day prices, or even intraday prices (as is the case with one-touch options), and that the volume of trading is generally highest (and thus allows the most liquidity for hedging) at the opening and closing moments of the trading day.
Not to mention that the significance of a variance injection is usually a function of its timescale.
I want to point out that market mechanics are vastly different when individual daily moves are higher, even if weekly moves are identical. In other words, there is a path dependency. Stop orders get triggered as a result of price action. The price of option products tends to increase in high-volatility moments. Day traders and market makers have intraday losses that alter the way they trade, both psychologically and according to the rules of their firms. Price discovery becomes more difficult, which makes market access more expensive.
The fundamentals of companies may not change directly, but the cost of doing business changes for financial companies, and that can affect other companies on a larger timescale. For example, a media company that does stock buybacks via accelerated share repurchase agreements will have a fundamentally different deal profile if it expects volatility to be higher, because these agreements often include terms for cancellation if the stock dips beyond a particular price.
Highly volatile markets can also affect companies' ability to access money by borrowing from banks or selling financial assets. So, even on a longer-term horizon, higher daily volatility makes the financial regime inherently different, even if weekly volatility remains unchanged.
If you relegate big daily moves to the realm of "I don't care," you prevent yourself from perceiving some of those differences, and ultimately only harm yourself -- the rest of the market, by and large, understands that big daily moves have an impact on the market even if they are reversed shortly thereafter.
Not to mention that the significance of a variance injection is usually a function of its timescale.
I want to point out that market mechanics are vastly different when individual daily moves are higher, even if weekly moves are identical. In other words, there is a path dependency. Stop orders get triggered as a result of price action. The price of option products tends to increase in high-volatility moments. Day traders and market makers have intraday losses that alter the way they trade, both psychologically and according to the rules of their firms. Price discovery becomes more difficult, which makes market access more expensive.
The fundamentals of companies may not change directly, but the cost of doing business changes for financial companies, and that can affect other companies on a larger timescale. For example, a media company that does stock buybacks via accelerated share repurchase agreements will have a fundamentally different deal profile if it expects volatility to be higher, because these agreements often include terms for cancellation if the stock dips beyond a particular price.
Highly volatile markets can also affect companies' ability to access money by borrowing from banks or selling financial assets. So, even on a longer-term horizon, higher daily volatility makes the financial regime inherently different, even if weekly volatility remains unchanged.
If you relegate big daily moves to the realm of "I don't care," you prevent yourself from perceiving some of those differences, and ultimately only harm yourself -- the rest of the market, by and large, understands that big daily moves have an impact on the market even if they are reversed shortly thereafter.