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Glossary of Option Terms: Volatility
Volatility
Definition: A measure of the inclination of a market or security to rise or fall sharply within a period of time. May denote the extent of the return of an underlying asset fluctuation between its birth and death/expiration. Primarily determines the value of options and time values. Two kinds: Implied (calculated with pricing model, usually Black-Scholes) and Historical (statistics).
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