General

Historical Volatility

A statistical measure of how much a security's price has fluctuated over a specific past period, usually expressed as an annualized standard deviation of returns. Unlike implied volatility, which is forward-looking and derived from options prices, historical volatility is purely backward-looking. Traders compare the two to assess whether options are relatively cheap or expensive -- when implied volatility significantly exceeds historical volatility, options premiums may be inflated.

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