Futures & options
What is Implied volatility (IV)?
Also called: IV
Hinglish mein padhein: Implied volatility (IV) kya hoti hai?
Implied volatility is the market's expectation of future volatility, backed out from option prices. High IV means expensive options.
IV often rises before events like results or budgets and collapses after them ('IV crush'), which can hurt option buyers even if they guessed the direction right.
India VIX is calculated from Nifty option IVs.
Related terms
- India VIXIndia VIX is NSE's volatility index. It estimates how much the Nifty is expected to move over the next 30 days, based on option prices.
- Option premiumThe premium is the price of an option. It is made of intrinsic value (how much it is in the money) plus time value.
- Options (call and put)An option gives the buyer the right, but not the obligation, to buy (call) or sell (put) at a strike price before expiry. The seller takes the obligation.