Written By: Ehsan Jahandarpour

In finance, volatility is a measure for variation of price of a financial instrument over time. Historic volatility is derived from time series of past market prices. An implied volatility is derived from the market price of a market traded derivative (in particular an option). The symbol σ is used for volatility, and corresponds to standard deviation, which should not be confused with the similarly named variance, which is instead the square, σ2.