Fluctuations in a company's stock price or in prices throughout a stock market. Volatility is one of the key variables in stock option valuation models, such as Black-Scholes
. Companies use these models to calculate the related corporate earnings charge
. The FASB
allows companies flexibility in measuring the volatility of their stock prices. Companies can use estimators involving historical volatility, peer historical volatility, implied volatility, or a blend of these.