Options & derivatives
Implied volatility
Implied volatility is the market's estimate of how much an asset will move in the future, reflected in option prices.
Implied volatility is the market's estimate of how much an asset will move in the future, reflected in option prices.
The higher the implied volatility, the more expensive options are, because a big move is expected. It often spikes before an event (earnings) and drops after: a classic trap for option buyers.
Before earnings, implied volatility rises and options get expensive; afterward, it collapses.
Understanding a term is good. Applying it on a real platform with a clear method is better. That is exactly what we do in 5 days.