Volatile

(1) A market or security is said to be volatile when it is subject to major fluctuations. The beta coefficient measures the relative volatility of a security in relation to the market as a whole. (2) In the case of a derivative, volatility is measured based on the price of the underlying; there are basically two types of volatility: historical volatility, which is the volatility of the underlying's price over a past period and, in the case of an option, implied volatility, which is the volatility of the underlying's price as implied by the price of the option at a specific time.