What is Volatility? Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security. Volatility is often measured as either the standard deviation or variance between returns from that same security or market index. In the securities markets, volatility is often associated with big swings in either direction. For example, when the stock market rises and falls more than 5 percent per day over a sustained period of time, it is called a "volatile" market. An asset's volatility is a key factor when pricing options contracts. Related articles What is Volatility Skew? What are VIX Futures? What is a Linear Stock Payoff? What is VIX Ref? What is a Gamma Profile?