What is implied volatility in options?

Short answer

Implied volatility (IV) is how big a move the options market expects, expressed as an annualized percentage and backed out of option prices. High IV means options are expensive; low IV means they are cheap. It usually rises before events like earnings and falls right after.

SPY volatility skew, live

As of Oct 16, 7:49 PM ET

25-delta call IV minus 25-delta put IV, in volatility points. Source · Rebel Intelligence.

Key terms

IV: the expected annualized move implied by option prices.
IV rank: where today's IV sits within its past-year range (0 = lowest, 100 = highest).
IV crush: the sharp drop in IV after an event passes, which cuts option prices even if the stock moves.
Expected move: roughly price × IV × √(days/365), the one-standard-deviation range.

How traders use it (examples, not advice)

High IV: strategies that sell premium with defined risk, such as credit spreads or iron condors.
Low IV: strategies that buy premium, such as debit spreads or long calendars.
Before earnings: compare the expected move to past earnings moves.

Common questions

Is high implied volatility bad?

Not by itself. It means options cost more and the market expects bigger moves. It favors sellers of premium and hurts buyers if IV later falls.

What causes IV crush?

Uncertainty resolving — usually earnings, a court ruling or a data release. Once the news is out, the extra premium priced in for the unknown disappears.

What is the difference between implied and historical volatility?

Historical volatility measures how much the stock actually moved in the past; implied volatility is what option prices expect going forward.

Go deeper with Rebel Intel

What is NVDA's implied volatility and IV rank today?What is the expected move for TSLA this week?Show me the volatility skew for SPY

Educational only, not investment advice. Options involve risk and are not suitable for all investors. See how Intel is reviewed.