Implied Volatility (IV)

Implied Volatility (IV) is a metric used in Options pricing that reflects the market’s expectation of future volatility of the underlying Asset’s price. It is derived from the option’s market price and indicates how much the market believes the Asset’s price will fluctuate over the life of the option. Higher IV generally suggests a higher expected price movement and is often associated with increased uncertainty or risk.

Implied Volatility is expressed as a percentage and does not predict the direction of price movement, only the magnitude. It is important for traders as it helps in assessing the relative value of Options