What is implied volatility?
How much movement the market is currently pricing in. High means options are expensive, low means they are cheap — and we always show you where it sits against that stock's own past, because the number alone tells you nothing.
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Implied volatility, in full.
Implied volatility is not a forecast of direction. It is the market's estimate of how far a stock is likely to travel, in either direction, before the contract expires — read backwards out of what people are currently willing to pay.
It is the single biggest reason a beginner buys an option, is right about the direction, and still loses money. Buy a call the day before earnings and you are paying for the movement everybody already expects. The announcement comes, the uncertainty disappears, and the option can lose value even though the stock went the way you said.
A reading of 42 means nothing on its own. Against a stock that has spent the last year between 20 and 30, it means options are unusually expensive right now.
It decides whether you are being paid well to take a risk or overpaying to take one — and it is the trap that catches new options buyers first.
Words that go with it.
See it happening.
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