Implied volatility explained

Implied volatility (IV) is the market's consensus forecast of how much a stock will move, derived from current option prices. High IV means options are expensive; low IV means they're cheap.

IV spikes before earnings, FDA announcements, or macro events. After the event passes, IV often collapses sharply — this is called an IV crush, and it can hurt option buyers even if the stock moves in the right direction.

Compare a stock's current IV to its historical IV (HV) using an IV Rank or IV Percentile reading. An IV Rank of 80+ suggests options are expensive relative to recent history — a potential edge for sellers.