Implied Volatility

A term that refers to the current market price of volatility for a given option. While historical volatility is observable, future volatility is unknown. The current price of volatility (i.e. implied volatility) reflects the culmination of the market’s expectations for future volatility. Implied volatility is dynamic and fluctuates according to supply and demand in the market.

This is a definition, not a recommendation. Options carry risk and can expire worthless. See how the desk actually trades at TrueTrader.