Implied Volatility (IV)
Also called: iv
The market’s estimate of how much a stock could move, baked into option prices.
Implied volatility is the single biggest driver of how much premium an option pays. High IV means the market expects big moves, so premium is fat. That is not free money: fat premium is the market pricing in a real chance the stock moves hard against you. Low IV means calmer expectations and thinner premium.
For example
A quiet blue chip might pay 1% for a 35-day put. A volatile small-cap might pay 12% for the same. The 12% is a warning label, not a gift.
Related terms
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