IV against historical volatility
Definition · Level 5 · Greeks & volatility
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Comparing an option’s implied volatility with the stock’s recent realized volatility: an IV well above it means the options price more movement than the stock has lately shown. A statement about price, not a promise.
Example
IV 30, historical volatility 18: options are pricing a lot more than the last month’s moves.
Where Tradecraft teaches it
Level 5 · Greeks & volatility, in the lesson “IV rank and IV percentile: is implied volatility high or low?”: How to judge whether implied volatility is high or low for this stock, with two measures and their traps.
Related terms
- IV percentileShare of trading days in the past year on which implied volatility was below today’s level; less distorted by one spike than the range-based measure.
- IV rankWhere current implied volatility sits in its 52-week range: (IV − 52-week low) ÷ (52-week high − 52-week low) × 100.
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