Volatility Volatility can be a very important factor in deciding what kind of options to buy or sell.
Volatility shows the investor the range that a stocks price has fluctuated in a certain period.
Statistical Volatility - a measure of actual asset price changes over a specific period of time. That is, the volatility that the market itself is implying. The computation of volatility is a difficult problem for mathematical application. In the Black-Scholes model, volatility is defined as the annual standard deviation of the stock price. There is a way in which the strategist can let the market compute the volatility for him.