Volatility

Variance

By Ryan Silk & Lawrence Polatchek · Reviewed April 2026 · Options Trading Glossary

Squared volatility measuring return dispersion

What is Variance?

Variance The square of volatility (standard deviation), measuring the average squared deviation of returns from the mean. Variance is the natural unit for many volatility calculations because variances add linearly over time while standard deviations do not. Variance swaps trade variance directly.

Complete Definition

The square of volatility (standard deviation), measuring the average squared deviation of returns from the mean. Variance is the natural unit for many volatility calculations because variances add linearly over time while standard deviations do not. Variance swaps trade variance directly.

Related Terms

Standard Deviation Realized Volatility Variance Swap

Written by

ApexVol Research Team

Quantitative options research

All calculations use live ORATS institutional data — the same source used by professional volatility desks.

Technical reviewer

Ryan Silk, ApexVol Founder

Reviewed for technical accuracy

10+ years trading options. Built ApexVol's pricing engine, Greeks model, and IV-rank methodology.

This guide is updated as market conditions and ORATS data change. Last revised 2026-05-12. How we research →

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