noun

volatility

vol-uh-TIL-i-tee

Volatility (noun) means the tendency of a price, market or value to move sharply and unpredictably over a short period. Example: “Volatility in the oil market pushed petrol prices up twice in a fortnight.”

noun

The tendency of a price, market or value to move sharply and unpredictably over a short period.

"Volatility in the oil market pushed petrol prices up twice in a fortnight."

"The fund uses options to hedge against volatility."

A tendency to change mood or behaviour suddenly and without warning, or a situation liable to turn violent at any moment.

"His volatility made the whole newsroom walk on eggshells."

"Aid workers withdrew because of the volatility of the border region."

technical In chemistry, the readiness with which a substance evaporates at ordinary temperatures.

"Petrol's high volatility is what makes its vapour so dangerous indoors."

How to Use Volatility

Learner’s notes

In plain EnglishHow quickly and wildly something changes.

When to use it

Most common in finance, where it has a precise statistical meaning (the standard deviation of returns) as well as a loose everyday one.

Memory tip

Volatility describes the size of the swings, not the direction — a market can be volatile while rising.

Trace the full origin ↓

Easily confused with

variance → risk → liquidity →

Common pairings

market volatility price volatility implied volatility period of volatility low volatility

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Fill the Gap

Can you complete this real example?

_____ in the oil market pushed petrol prices up twice in a fortnight.

Etymology

From Latin volatilis "flying, fleeting", from volare "to fly".

Origin: Latin

Synonyms

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instability turbulence choppiness fluctuation unpredictability temperamentality explosiveness

Antonyms

stability steadiness even temper calm involatility

Related Words

still peace balance patient afraid angry calm upset

Rhymes for volatility

city pity deity acuity parity entity brevity opacity paucity ability quality reality

See all rhymes for volatility →

Frequently Asked Questions

What is the difference between volatility and risk?

Volatility measures how much something moves; risk is the chance of losing money. High volatility often signals higher risk, but a steadily declining asset can be low in volatility and a very bad investment.

Is high volatility always bad?

No. Traders who profit from movement need it, and options are worth more when volatility is high. It is bad mainly for people who need a predictable value on a fixed date.

What does implied volatility mean?

It is the amount of future movement the market is pricing into an option, worked back from the option's current price. It reflects expectation rather than what has already happened.

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