Implied Volatility Calculator
Reverse-engineer the implied volatility from any option price.
Option Parameters
Results
Enter parameters and click "Calculate IV" for results.
Free 160-Page Options Guide
Clear visuals and real examples for every essential concept.
Implied volatility (IV) represents the market's expectation of future price movement. Unlike historical volatility which looks backward, IV is forward-looking and derived from current option prices.
Why IV Matters
- Pricing: IV is the primary driver of an option's extrinsic value. Higher IV = more expensive options.
- Expected Move: IV reflects how much the market expects the stock to move. High IV means wider expected ranges; low IV means tighter ranges.
- Strategy Selection: Different IV environments favor different strategies. Some traders wait for elevated IV to sell premium; others seek low IV for cheaper long options.
IV Rank and IV Percentile
To put current IV in context, traders often use IV Rank (where current IV falls in the 52-week range) and IV Percentile (what percentage of days in the past year had lower IV). Both metrics help identify when IV is historically high or low.
