Investing Dictionary
Options & Bonds

What is Implied Volatility?

The market's expectation of how much a stock will move

Full Explanation

Implied volatility (IV) is baked into option prices. High IV = expensive options (the market expects big moves). Low IV = cheap options. IV spikes before earnings reports.

Pro Tip

Buying options when IV is sky-high can mean you need a massive move just to break even.

Related Options & Bonds Terms

Covered Call

Selling someone else the right to buy your stock at a higher price

Credit Rating

A grade for how likely a borrower is to repay their debt

Expiration Date

The last day an option can be used

Put Option

A contract giving you the right to sell a stock at a set price

View all Options & Bonds terms →

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