TradingIntermediate
Volatility
How much and how fast a price swings around its average.
Detailed explanation
Statistically it is the standard deviation of returns, annualised. High volatility means wider possible outcomes in both directions — it is a measure of uncertainty, not of direction. India VIX is the market's expectation of near-term NIFTY volatility.
Example
An asset with 20% annualised volatility and an expected 12% return will, in roughly two years out of three, land between −8% and +32%.
Why it matters
Position size, option pricing and your own ability to sleep at night all depend on it.
Key points
- Volatility is symmetric — it counts upside swings too.
- Rises sharply during market stress.
- Options become more expensive when implied volatility rises.
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Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.