vol⋅a⋅tile
[vol-uh-tl, -til or, especially Brit., -tahyl]
| 1. | evaporating rapidly; passing off readily in the form of vapor: Acetone is a volatile solvent. |
| 2. | tending or threatening to break out into open violence; explosive: a volatile political situation. |
| 3. | changeable; mercurial; flighty: a volatile disposition. |
| 4. | (of prices, values, etc.) tending to fluctuate sharply and regularly: volatile market conditions. |
| 5. | fleeting; transient: volatile beauty. |
| 6. | Computers. of or pertaining to storage that does not retain data when electrical power is turned off or fails. |
| 7. | able to fly or flying. |
| 8. | a volatile substance, as a gas or solvent. |
Based on the Random House Dictionary, © Random House, Inc. 2009.
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Copyright © 2009 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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Volatility
1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time.
2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the expiration of the option.
Investopedia Commentary
Volatility is typically calculated by using variance or annualized standard deviation of the price or return. A measure of the relative volatility of a stock to the market is its beta. A highly volatile market means that prices have huge swings in very short periods of time.
Related Links
The Uses And Limits Of Volatility
The ABCs of Option Volatility
Gauging Sentiment with the Volatility Index
Introduction to Value at Risk (VAR) - Part 1
See also: Average True Range (ATR), Beta, Futures, Hedge, Standard Deviation, VIX - CBOE Volatility Index, VXN - CBOE Nasdaq Volatility Index
Also spelled: volitility
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