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  1. Home
  2. /Glossary
  3. /Implied Volatility (IV)
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Implied Volatility (IV)

The market's expectation of how much an asset's price will move, derived from options pricing.

Definition

The market's expectation of how much an asset's price will move, derived from options pricing. High IV means the market expects big moves, so options are expensive. Low IV means calm is expected. Crypto options traders use IV to decide when to buy options (low IV) versus sell them (high IV).

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Related Terms

Options

Contracts giving the right, but not obligation, to buy (call) or sell (put) an asset at a set price before expiration.

Volatility

How much an asset's price fluctuates over time.

Derivatives

Financial contracts whose value is based on an underlying asset.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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