Derivatives & Risk

What is historical volatility and how is it calculated?

Historical volatility measures how much an asset's price actually fluctuated over a past period, expressed as an annualized percentage. It is calculated by taking the standard deviation of daily returns over a chosen window, then scaling it to a yearly figure. For example, you compute daily log returns over 30 days, find their standard deviation, and multiply by the square root of 365. A higher reading means larger past swings. It describes the past, not the future, and high volatility signals greater uncertainty and risk in an asset.

Crypto investments are subject to market risk and volatility. Past performance is not indicative of future returns. This is general information, not investment advice — consider your own circumstances or consult a qualified adviser before investing.