In finance, historical volatility is a statistical measure of price dispersion over time. An investor calculates this by determining the average deviation from an average price. It is usually used to look at daily returns, but some investors also use it to look at intraday price changes.
Traditionally, options traders use a time period between 10 and 180 days when calculating historical volatility. Analysts can use any number of trading days when calculating historical volatility. When analyzing trading ideas, options traders use historical volatility and implied volatility.
In addition to expressing historical volatility as a percentage reflecting the standard deviation from the average price, investors can also use other methods to evaluate an asset's historical volatility. Historical volatility readings are often high when daily price changes are unstable.

Historical volatility measures the extent to which an asset's price has fluctuated over a specific period. It's a statistical metric derived from past market prices, usually calculated as the standard deviation of returns. Higher historical volatility indicates larger price swings, reflecting greater risk. This metric helps traders and investors gauge the stability of an asset and predict future price movements. It's particularly useful for options pricing, as it aids in estimating potential future volatility. Historical volatility contrasts with implied volatility, which forecasts future volatility based on market expectations. Understanding historical volatility is crucial for making informed investment decisions and managing risk effectively in financial markets.