Implied Volatility (IV)
The market's forecast of future price movement, embedded in options prices — high when fear or excitement runs hot.
Implied volatility is the amount of future price movement the market is pricing into options. It’s derived from option prices rather than history: when traders expect big moves (up or down), option premiums rise and IV climbs; in calm markets, IV falls and options get cheap.
IV matters even to non-options traders as a fear-and-anticipation gauge — crypto’s rough equivalent of the stock market’s VIX spikes before major events and crashes. For options traders it’s central: buying options when IV is high means overpaying, and a “volatility crush” after an anticipated event can lose money even when your price direction was right. You are always trading volatility, not just direction.