- A measurement of the change in price over a given period. It is often expressed as a percentage and computed as the annualized standard deviation of the percentage change in daily price. Chicago Board of Trade glossary————The rate of change in a variable. More formally, a statistical term to quantify the dispersion of variables such as rates or prices around the mean. A measure of the variability of the price of an underlying financial instrument, rate, commodity, or currency. Volatility only measures the quantity of the change - not the direction. Volatility is not influenced by the direction of the change; it does not matter whether the price rises or falls. Volatility is often used as a proxy for riskiness.See realized volatility and implied volatility. American Banker Glossary————A measure of risk based on the standard deviation of the asset return. volatility is a variable that appears in option pricing formulas, where it denotes the volatility of the underlying asset return from now to the expiration of the option. There are volatility indexes. Such as a scale of 1-9; a higher rating means higher risk. Bloomberg Financial Dictionary————An annualized measure of the fluctuation in the price of a futures contract. Historical volatility is the actual measure of futures price movement from the past. Implied volatility is a measure of what the market implies it is, as reflected in the option's price. Chicago Mercantile Exchange Glossary————1. Variability, usually with reference to returns available on a security.2. The risk that the price of a bond will vary due to a change in interest rates. Dresdner Kleinwort Wasserstein financial glossarySee also implied volatility and historic volatility. Dresdner Kleinwort Wasserstein financial glossary————Usually defined as the standard deviation of returns of an asset. Volatility generally refers to the magnitude of price movements in a specific asset. Large price movements are said to be more volatile and vice versa. Volatility has a major direct influence on option premium levels. When volatility is high, premiums increase (all other assumptions remaining the same). When volatility is low, premiums decline. Exchange Handbook Glossary————The relative rate at which the price of a security rises and falls over time. This is found by calculating the annualised standard deviation of daily changes in price. Financial Services Glossary————The tendency of security returns or prices to fluctuate in a random, unpredictable manner. Called historical volatility when derived from past movements. Called implied volatility when estimated from the market price of options. LIFFE————A measure of the amount of movement in the price of an instrument. London Stock Exchange Glossary
* * *volatile vol‧a‧tile [ˈvɒlətaɪl ǁ ˈvɑːlətl] adjectivea volatile market, situation etc is changing quickly and suddenly, for example rising and falling without much warning:
• Bonds started the year in a highly volatile trading environment.— volatility noun [uncountable] :
• The report questioned whether market volatility should be blamed on foreign investors.
* * *Volatility describes the degree to which a value, such as a stock price or an interest rate, changes over a specified time period. High volatility means that the value changes dramatically, usually due to high market uncertainty. Traders thrive on market volatility because it presents many opportunities to earn a profit. Low volatility means values change minimally, as is the case when all news has been priced into the market. Professional investors tend to benefit from low volatility because they are better able to lock in stable returns. The financial markets distinguish between historical volatility and implied volatility. Historical volatility is a measure of volatility based on past price or yield behaviour, while implied volatility is implied by the price of an option.
* * *volatile UK US /ˈvɒlətaɪl/ US /ˈvɑːlətəl/ adjective► likely to change often or suddenly and unexpectedly: »
American technology shares remain volatile.»
a volatile fund/investment/market»
Property has always been less volatile than shares or gilts.volatility noun [U]► »
Some investors are nervous about market volatility.
Financial and business terms. 2012.