Definitions for

**"implied volatility"****Related Terms:**Black-scholes option pricing model, Black-scholes, Delta , Delta hedging, Out-of-the-money, In-the-money, In the money, Out-of-the-money option, In-the-money option, At-the-money, Out of the money, At the money, In the money option, Index arbitrage, Black-scholes model, Bull spread, At-the-money option, Underlying asset, Hedge ratio, Bear spread, Conversion, Collar, Intrinsic value, Bear put spread, Exercise price, Strike price, Price spread, Straddle, Conversion arbitrage, Delta hedge, Ratio spread, Naked put, Bull put spread, Protective put, Bull call spread, Strike, Vertical spread, Bear call spread, Butterfly spread, Time spread, Long straddle, Derivative, Lookback option, Calendar spread, Derivatives, Naked option, Condor , Vega, Box, Volatile

A theoretical value designed to represent the volatility of the security underlying...

Volatility of an underlying asset, as measured from the price of derivatives assuming a standard pricing model.

The value for volatility embedded in the market price of an option. The market price of the option is used to derive the level of volatility implied in it. This represents the markets best estimate of future volatility, and can be compared with historical volatility to determine whether this view has changed.

This is the volatility that the underlying would need to have for the pricing model to produce the same theoretical option price as the actual option price. The term implied volatility comes from the fact that options imply the volatility of their underlying, just by their price. A computer model starts with the actual market price of an option, and measures IV by working the option fair value model backward, solving for volatility (normally an input) as if it were the unknown. In actuality, the fair value model cannot be worked backward. OptionVue 5 computes IV by working forward repeatedly through a series of intelligent guesses until the volatility is found which makes the fair value equal to the actual market price of the option.

The volatility level that is implied by an optionâ€™s price takes into account historical volatility but also a view as to future volatility. It is therefore very possible for the levels of historical and implied volatility to differ dramatically. Implied volatility is more important than historical volatility and it is strongly advised that people do not trade options unless they understand the basics of how volatility affects the price or premium of an option. A more detailed guide on option volatility available here

The volatility that produces the "best fit" for all underlying option prices on that underlying stock. Implied volatility is derived by taking actual market prices of options and working backwards in a theoretical option-pricing model to find the assumed volatility.

A theoretical value representing the volatility of the underlying asset inferred from the market price, maturity date, exercise price and riskless rate of return of an associated option using a theoretical model, usually the Black and Scholes or the binomial model, assuming that the model prices the option correctly.

The level of volatility which the market implicitly expects given the current market price of a security.... more on: Implied volatility

A value that is used in the pricing of an option, or that which may be implied by observing the actual price of an option.

The value of volatility embedded in an option price.

Associated solely with options, the market’s perception as to future volatility can be implied by the input of the market price of an option into the theoretical option pricing model, along with the other known inputs, namely time to expiry, exercise price, underlying price and interest rates in order to find the unknown volatility.

The volatility computed using the actual market prices of an option contract and one of a number of pricing models. For example, if the market price of an option rises without a change in the price of the underlying stock or future, implied volatility will have risen.

The figure derived from the market price of an option, it can be thought of as a measure of the risk of an instrument or portfolio at present as opposed to some period in the past, which is known as historic volatility.

A measurement of the market's expected price range of the underlying based on the market-traded Options premiums. Alternatively, the value of the volatility variable that buyers and sellers appear to accept when the market price of an option is determined. Implied volatility is calculated by using the market price of an option as the fair value in an option model and calculating (by iteration) the volatility level consistent with that option price. Volatility is nearly always stated as annualized standard deviation in percent of face amount or rate.

The level of volatility in the price of an underlying asset, which is assumed for the purpose of calculating a price of an option, based on that asset.

A measure of volatility assigned to a series by the current market price.

using the Black-Scholes option-pricing model, implied volatility is the level of the standard deviation of price changes that equates the current option price to the other independent variables in the formula. Often used as a measure of current levels of market uncertainty

the expected volatility in the return of an asset derived from its option price

Implied Volatility is the amount of stock price variation that is expected to ocurr in the stock price. Implied Volatility is expressed as the price change in percent over a one year time period. IV does not imply any direction of future stock movement. If future IV is high then the stock will widely vary up and/or down. If future IV is low then the stock variations are expected to be small. Future expected stock volatility is implied by the price of the option. The IV implied by the option price is computed using the Black-Scholes option model.

Is a measure of an option volatility. The volatility of an option reflects the market expectation of a possible future outcome. An analogy may be the fixed "odds" for a football match which suggests what the public feels the outcome may be. Implied volatility is also significantly influenced by the market maker.

Impulsive Bearish Elliott AWE chart pattern Impulsive Bullish Elliott AWE chart pattern In-the-Money Option

Given information about the price of an option and the price of the underlying, it is possible using the Black-Scholes model to calculate the volatility of the underlying implied by the option's price. This datum is frequently used as an indicator of the market's expectations of short-term volatility.

The assumption of the stock's volatility that helps determine the option's price. Since all other factors in the options pricing model are assumed to be known, the implied volatility is calculated last as a plug-in factor after other options pricing components are taken into account.

The implied volatility of an asset is the name given to the volatility that an asset is expected to have over some future period.

The volatility that is implied by an option value given the other determinants of option value.

A measurement of the volatility of a stock. Current price rather than historical price is used. Generally, if the price of an option rises without a corresponding rise in the underlying equity, implied volatility is considered to have risen.

the expected standard deviation of percentage price changes

The volatility level at which the theoretical value calculated by an options pricing model would be the same as the current option price.

A forward looking view of the volatility of the price of the underlying asset derived from option pricing models such as Black-Scholes, that take into consideration other factors including the option price, strike (exercise) price, interest rate and maturity date.

A measurement of the market's expected price range of the underlying currency futures based on the traded option premiums.

The theoretically derived volatility in the Black and Scholes option-price model for an underlying financial asset, calculated on the basis of the observed option prices. See also standard deviation.

The volatility level that is implied by an optionâ€™s price takes into account historical volatility but also a view as to future volatility. It is therefore very possible for the levels of historical and implied volatility to differ dramatically. Implied volatility is more important than historical volatility and it is strongly advised that people do not trade options unless they understand the basics of how volatility affects the price or premium of an option TOP 3 STOCKMARKET SEARCHES FROM FIND.co.uk Online Brokers The Share Centre TD Waterhouse Barclays Stockbrokers Spread Betting CMC Markets Finspreads IG Index CFDs Man Financial City Index E*Trade Pro. Traded Options Self Trade IG Markets

The volatility derived from actual price quoted in the market. Given the quoted price, the volatility is obtained by working the model backward.

Implied volatilities are obtained from observable prices for traded options, and capture the market's current expectations for the future distribution of market prices.

The volatility of the underlying instrument implied by the market value options price.

The level of volatility in the price of an underlying asset, used for calculating the price of an option.

The volatility implied by a certain option price. options

A measure of the volatility of the underlying stock, it is determined by using prices currently existing in the market at the time, rather than using historical data on the price changes of the underlying stock.

A mathematical calculation made using one of the option evaluation models, which includes the option premium observed on the market, as well as other important factors to help determine the option's volatility.

Implied volatility is the volatility anticipated by the financial markets. The higher the implied volatility, the higher the value of the warrant. Implied volatility is also the volatility implicit in the market price of the warrant. For warrants of similar terms, the higher the implied volatility, the more expensive a warrant is.

A measure of the volatility of the underlying security derived by applying curre...

The expected volatility in a stock's return derived from its option price, maturity date, exercise price, and riskless rate of return, using an option-pricing model such as Black/Scholes.

A measure for the market to forecast future volatility.

The volatility that, when inserted into the equation for calculating the theoretical value of an option, makes the theoretical value the same as the price of the option in the marketplace. Implied volatility is a property of the option.

A measure of an underlying share's expected volatility as reflected by the market price of the call warrants on that underlying share using an appropriate model. It reflects the market expectations of future volatility in the share price. An implied volatility of 30% means that the market expected variation of the share price movements is +30% to -30%, on an annualized basis. All things being equal, generally, the higher the implied volatility, the higher the call warrant price. The concept of implied volatility is not applicable for Zero-strike call warrants.

See "volatility."

The value of the underlying asset price volatility that would equate option price and fair value.

The volatility of the asset, liability, security or commodity underlying a derivative, which is derived from the option pricing formula and the anchor price of the option itself.

A measurement of the market's expected price range of the underlying commodity futures based on market-traded options premiums.

The volatility of a futures contract, security, or other instrument as implied by the prices of an option on that instrument, calculated using an options pricing model.

The volatility of the underlying instrument implied by the market price of options.

The measure of volatility in the price of an underlying stock. It is determined by using current market prices rather than historical data on price fluctuation.

An estimate of volatility based upon option prices.

In financial mathematics, the implied volatility of an Option contract is the volatility implied by the market price of the option based on an option pricing model. In other words, it is the volatility that, given a particular pricing model, yields a theoretical value for the option equal to the current market price. Non-option financial instruments that have embedded optionality, such as an interest rate cap, can also have an implied volatility.

Implied volatility is inversaly proportinal to the market prices, it means when implied volatility decreases the makret prices are goes up and do opposite when implied
volatility are up showing the huge loss in the market industry.So, it is the fact that implied volatility indicates the higher risk.
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Implied volatility