In a very current (fairly condensed) discussion paper, I saw that Rolloos also deducted a price approximation without a model for start-up flights up front: a volatility swap from start up front is really a swap on future volatility realized. In another thread, I wrote that Rolloos -Arslan wrote an interesting document on the approximation of prices without a Spot-Start-Volswap model. I think the underlying idea is that the future ATM IV is a substitute for future volatility realized. But the ATM IV, spot or future, is not a good proxy for expected volatility, if there is a significant correlation between the underlying and volatility. An agreement (term) between a seller and a buyer to exchange a Straddle option on a specified expiry date. On trading day, counterparties determine both expiry date and volatility. On the expiry date, the strike price is set on the straddle on the date of the money on that date. In other words, the prior Volatility Agreement is a futures contract on the realized volatility (implied volatility) of a certain underlying, whether it be equities, stock index, currencies, interest rates, commodities. Etc.
This is used to increase exposure to implied forward volatility and is generally similar to trading with a longer option and cutting your gamma exposure with another option with expiration equal to the start date in advance, constantly balanced, so that you are flat gamma. Volatility of transactions gives investors the opportunity to hedge the volatility risks associated with a deviant position against the unfavourable movements of the underlyings in the market. It also allows investors to speculate in the future or take a look at volatility levels. Indeed, commercial volatility is greater than Delta coverage, which uses options to cast views on the future direction of volatility. In terms of sensitivity, it is similar to go-start-flight/var swaps because you have no gamma and you have exposure to the front flight. However, it is different that you are exposed to standard vega deformations of the vanilla and MTM options because of the tilt, as the spot moves away from the original trading date.