Implied Volatility (IV)

Implied Volatility (IV) is the market's forecast of how much a stock's price will swing up and down over the next few months. It's called "implied" because traders back-calculate it from option prices (contracts that give you the right to buy or sell a stock at a set price). You'll encounter IV when trading options—it directly affects how expensive those contracts are. High IV means traders expect wild price swings, making options pricier; low IV means they expect calm trading, making options cheaper. For example, if TechCorp stock is steady but earnings are coming, IV might spike because traders anticipate big moves. Understanding IV helps you avoid overpaying for options and spot when the market is nervous.