volatility drag

noun

A negative impact on the compound returns from a leveraged investment product caused by an underlying reference value being regularly reset so that to cover any loss in value the appreciation in proportion to it needs to be larger.

Similar
variance drainvolatility taxvolatility decay
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Meanings

nounvolatility drag (countable and uncountable, plural volatility drags)

plural volatility drags

  1. countableinformaluncountablebusinessA negative impact on the compound returns from a leveraged investment product caused by an underlying reference value being regularly reset so that to cover any loss in value the appreciation in proportion to it needs to be larger.

    Synonyms: variance drain, volatility tax, volatility decay

Synonyms & antonyms

nounA negative impact on the compound returns from a leveraged investment product caused by an underlying reference value being regularly reset so that to cover any loss in value the appreciation in proportion to it needs to be larger.

Similar
variance drainvolatility taxvolatility decay
Also see
variance drainvolatility decayvolatility tax
Cite this entry
APA

volatility drag. (n.d.). In WatkinsX Dictionary. Retrieved November 4, 2026, from https://dictionary.watkinsx.com/word/volatility%20drag

MLA

“volatility drag.” WatkinsX Dictionary, https://dictionary.watkinsx.com/word/volatility%20drag. Accessed November 4, 2026.

Chicago

WatkinsX Dictionary, s.v. “volatility drag,” accessed November 4, 2026, https://dictionary.watkinsx.com/word/volatility%20drag.

Source: volatility drag on Wiktionary, CC BY-SA 4.0.