What is Volatility?
The magnitude of price fluctuations over time.
In Depth
Volatility is typically measured as the standard deviation of returns (historical volatility) or implied by option prices (implied volatility, e.g., the VIX). Higher volatility means larger price swings — increasing both upside potential and downside risk.
Example
A stock with annualized volatility of 40% experiences much larger daily swings than one at 15%.