Volatility

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Volatility is the relative rate at which the price of a security or contract moves up and down. Volatility is found by calculating the annualized standard deviation of daily change in price.^[1][2]

A volatile market, contract or security is one whose price tends to fluctuate sharply and regularly.

Contents 1 Technical Analysis 2 VIX 3 Resources 4 References

Technical Analysis

Volatility can be used in various manners to measure market activity. Traders use volatility indicators to make decisions about changes in market direction.^[3]

VIX

The VIX is a volatility index developed by the Chicago Board Options Exchange in 1993 to measure investor sentiment and market volatility. It is often referred to as a "fear guage."

The CBOE has introduced futures and options on the VIX.

Resources

• Ways To Turn Volatility Into Opportunity, FT.com, July 23, 2008

References

1. ↑ Glossary. U.S. Commodity Futures Trading Commission. Retrieved on May 9, 2008.
2. ↑ Glossary. CME. Retrieved on July 24, 2008.
3. ↑ Volatility. Online Trading Concepts. Retrieved on October 23, 2008.