Volatility in financial market terms is a yardstick for measuring the magnitude of the fluctuations in a financial instrument. "Implied volatility" indicates the market's expectation regarding the degree to which a financial instrument will fluctuate in the future. In addition to the price of the underlying instrument, implied volatility is the most significant influencing factor in the value of options and warrants. Increasing implied volatility in an underlying instrument leads to a rise in the price of the related options and warrants, because the potential for a higher payoff at maturity increases while the maximum loss for the buyer is always limited to the amount of capital invested. A decline in an underlying instrument's implied volatility leads to lower prices in the related options and warrants. In worst case, this effect can be so pronounced that the price of a call warrant drops even though the underlying instrument has risen in price. The coefficient "vega" indicates the extent to which a warrant responds to changes in the implied volatility of the underlying instrument. Changes in volatility have an impact only on the time value of an option/warrant. Thus investors can reduce the influence of volatility by buying an option/warrant that already has intrinsic value, i.e. is trading in the money.