# Is Volatility a Percentage?

There is some confusion regarding whether volatility (in finance) is a percentage or “just a number”.

## Is Volatility a Percentage?

Yes, usually volatility is a percentage. But it does not always need to be.

Percent per annum is the most common unit of volatility in finance. It is a direct implication of the way volatility is usually calculated.

Alternatively, you can also quote volatility in other units:

• Percent per day, week, or any other time period.
• Dollars, euros, or other currency units (no percent).

Nevertheless, when you hear a trader say that volatility is 25, it usually means that volatility is 25% p.a.

## Volatility vs. Volatility Indices

The VIX (CBOE Volatility Index) and other volatility indices typically reach values in low double digit numbers. You may hear something like “The VIX increased to 17 today”. It means that implied volatility of the S&P500 index (which is measured by the VIX) increased to 17% p.a.

However, there are no percentages in the indices themselves. The units of the VIX index for example are usually referred to as “VIX points”. One VIX point represents one percent per annum in the implied volatility of the S&P500 index.

It is no big deal, but the distinction between points and percentages becomes important when you are trading derivatives (futures and options) on volatility indices. 17% mathematically means 0.17, but if you trade a futures contract on the VIX, which has a multiplier of 1,000, the value of a contract priced 17 is 17,000 dollars (17 x 1,000) and not 170 (0.17 x 1,000).

## Related pages

kurtosis in statisticssample kurtosisstandard error of the mean formula excelrange variance and standard deviation calculatorcumulative distribution function excelvix trades&p500 vixdow jones industrial average divisorrisk not in varfutures vs options differencebearish call spread13f sec filingshow to calculate sigma squaredberkshire hathaway 13fstock option greeksmsft excelmeasure skewnessarithmetic return calculatoroptions the greeksvolatility calculation formulamsft yahoo financestandard deviation finance calculatorhow to compute implied volatilitymeasure of skewness formulablack scholes pricingstatistics kurtosisindicative pricing definitionfloat-adjusted market capitalizationcovered call payoffvix inversehow to change font size in notepadschedule 13fvix tickerthe greeks financeputting formulas in excelhow to calculate annual rate of return in excelvixy etfvix horizonprofit loss formula in excelbull call spread strategyhedge fund sec filingswacc formulaswhat does oversold mean in the stock marketfree float market capitalisationsem formula in excelhow to calculate population mean from sample meanvix short termwhat is squared deviationhow to calculate a sample variancevix futures curvebuying vixsample variance excel formulacollar payoff diagramcalculate skewskewness of distributioncalculating portfolio weightscalculate variance excelsample variance definitionvixywhat does macd measuremeasure of skewness formulasample variance excel formularealized rate of return calculatorvix term structurehedge calculatorsample mean standard deviation calculatoryahoo stock symbol searchskewness valuehow to calculate variance on calculatorhow to use stdev in excelmultiplication square rootsin contangofrequency standard deviation calculatormacd calculatorcalculate standard deviation with excelblack scholes simplifiedcalculating stock volatilityinverse vixhow to use normdist in excelskewness interpretation