Volatility

Volatility refers to how much an asset's price fluctuates over a certain period. Highly volatile assets show significant price swings, while low-volatility assets tend to remain steady. Greater volatility often means higher risk for investors.

Historical volatility is determined by looking at how prices have moved in the past. Predicting future volatility involves estimates and market expectations, not certainties. One way to gauge the market’s view of future volatility is by analyzing implied volatility, which can be derived from the prices of futures contracts.