Glossary
Volatility
How much and how quickly an asset’s price moves, often measured as the standard deviation of its returns.
Volatility describes the size of price swings, not their direction. Historical volatility is usually calculated as the standard deviation of daily returns and then annualized, by multiplying by the square root of the number of trading periods in a year.
Implied volatility is different: it is the level of future volatility priced into options. The VIX, published by Cboe, is a widely followed measure of the 30-day implied volatility of S&P 500 options.
Volatility tends to rise around major data releases, earnings reports and sharp market declines, and it often clusters: calm periods and turbulent periods each tend to last a while.
Related terms
For education only, not financial advice. Crypto assets and stocks are volatile, and leveraged positions can lose more than the money you put in.