Implied Volatility

Implied volatility (IV) is a percentage representing the market's estimate of how much a stock's price could swing, up or down, over the life of an option. It's a forecast of the size of a move, not its direction, and it's baked straight into the premium — higher IV means a richer premium, because the market is pricing in a wider range of outcomes. IV typically rises heading into known events like earnings, then drops sharply once the uncertainty resolves — often called "IV crush." High IV means richer premiums for sellers, but it also signals the market expects a genuinely bigger move, including to the downside.