Volatility financial definition of Volatility

Volatility is a statistical measure of the dispersion of returns for a given security or market index. Volatility can either be measured by using the standard deviation or variance between returns from that same security or market index.

* Volatility (Stock market) - Definition,meaning - Online Encyclopedia

Commonly, the higher the volatility, the riskier the security. A variable in option pricing formulas showing the extent to which the return of the underlying asset will fluctuate between now and the option's expiration. Volatility, as expressed as a percentage coefficient within option-pricing formulas, arises from daily trading activities.

How volatility is measured will affect the value of the coefficient used.

In other words, volatility refers to the amount of uncertainty or risk about the size of changes in a security's value. A higher volatility means that a security's value can potentially be spread out over a larger range of values.

This means that the price of the security can change dramatically over a short time period in either direction. A lower volatility means that a security's value does not fluctuate dramatically, but changes in value at a steady pace over a period of time.

One measure of the relative volatility of a particular stock to the market is its beta. For example, a stock with a beta value of 1. Conversely, a stock with a beta of. Ready for more brain power on volatility?

Read A Simplified Approach to Calculating Volatility and The ABCs of Option Volatility. Dictionary Term Of The Day.

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Historical Volatility - HV Volatility Arbitrage Dispersion Implied Volatility - IV Beta Time-Varying Volatility Volatility Swap High Beta Index Variance Swap.

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