Definition · updated 2026-10-21
Implied volatility (IV)
Implied volatility is the annualised volatility an option's price implies under a pricing model: the market's estimate of how much the underlying will move. A 25% IV on a $100 stock implies a one-standard-deviation range of about ±$25 over a year, or about ±$1.30 over one day.
See it live: today's GEX levels by ticker.
Why it matters more than the price
Two options can cost the same and be cheap or expensive depending on IV. Buyers want IV low relative to the move they expect; sellers want it high relative to the move that arrives. The expected move converts IV into a dollar range you can compare with your thesis.
IV versus realised volatility
Realised volatility is what the stock actually did. IV usually trades above it, which is the premium sellers collect, and falls below it around surprises, which is when buyers win.
Frequently asked questions
- What is a high implied volatility?
- It depends on the name. 25% is high for an index ETF and low for a biotech. Compare IV with the stock's own history (IV rank) rather than with other stocks.
- How do I turn IV into an expected move?
- Spot × IV × √(days ÷ 365). For a one-day move, spot × IV × 0.052.