Implied Volatility
a.k.a. IV, Implied vol
The level of future price swings that option prices are 'implying', a measure of how nervous the market is.
In plain English
The level of future price swings that option prices are 'implying', a measure of how nervous the market is.
Option prices depend heavily on how much the market is expected to move. Work backwards from an option's price and you get implied volatility: the market's estimate of future volatility.
High IV means expensive options and a jittery market, often before big events. It does not predict direction, only size.
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