A statistical measurement of the dispersion of returns for a given security or market index. In general terms, the higher the volatility, the riskier the security. Within securities markets, volatility is often associated with big swings in either direction. For instance, when a market rises and falls more than 1% over a sustained time period, it is referred to as a “volatile” market. This volatility is a key factor taken into account when pricing options contracts. There are several ways to measure volatility, including beta coefficients, option pricing models, and standard deviations of returns.