Volatility¶
Volatility is the statistical measure of how widely an asset's price disperses around its average, expressed as the annualized standard deviation of returns. A stock with 20% annualized volatility is expected, with roughly 68% probability, to finish a year within plus or minus 20% of its starting price. Volatility is direction-agnostic: it measures the magnitude of price moves, not whether they are up or down.
HOW IT WORKS¶
Historical (realized) volatility is derived from periodic log returns — typically daily — then annualized by multiplying the sample standard deviation by the square root of 252, the conventional number of trading days in a year. A stock printing daily standard deviations of 1.34% annualizes to roughly 21%; one printing 2.5% daily annualizes to roughly 40%. Implied volatility is the forward-looking counterpart, backed out of live option prices using a model such as Black-Scholes rather than observed price history. Options traders compare the two figures to judge whether premium is currently rich or cheap relative to realized movement.
IN TAPEBOARD¶
Tapeboard surfaces volatility data throughout the terminal to support sizing, screening, and options decisions. The live scanner lets you filter for names whose volatility is expanding or contracting in real time, flagging regime shifts before they invalidate existing stop and target assumptions. Position sizing tools scale exposure inversely to volatility so that each trade contributes equal dollar risk regardless of the underlying's typical daily range. When reviewing an options chain, implied volatility is displayed alongside the trailing realized figure so you can assess edge before entering a straddle, strangle, or spread.