What is implied volatility?
Implied volatility (IV) is the market's expectation of an asset's future price volatility, derived from current options prices. High IV means options are expensive; low IV means they're cheap. IV typically rises before known events (earnings, FDA decisions, FOMC) and crushes after.
More detail
IV is annualized — an IV of 30% means the market expects about a 30% standard deviation move over the next year.
IV Rank measures where current IV sits relative to its 52-week range — useful for choosing premium-buying vs premium-selling strategies.
Long-vega strategies (buying options) profit from rising IV; short-vega strategies (selling options) profit from falling IV.