Volatility

Volatility

Measure of the extent to which the price of a security or an index fluctuates around a mean value during a fixed period of time

Volatility provides a means of measuring a stock's potential for profit or loss independent of market development. It assumes that past values are an indication of future performance. Because the volatility ratio expresses the extent to which the value of a security can expected to change in the future, it plays a particularly important role in the calculation of options prices.

Volatility is usually calculated for periods of 30 to 250 days.