Glossary › implied volatility
Trading glossary · advanced
implied volatility
How big a move people expect soon, worked out from what buy-or-sell tickets cost. Bigger expected moves make tickets pricier.
The fuller meaning
The volatility implied by option prices, reflecting how big a move the market expects. It usually rises before scheduled events and falls right after, so options can lose value even when the direction is right; it is a key input, with time and price, to an option's premium.
implied volatility, also called IV.
Related words
at the money · backtest · backwardation · basis · call option · contango · data snooping · delta · edge · entry trigger