Implied
volatility (commonly referred to as volatility or IV) is a important metric to understand and to be aware of when trading options. IV is determined by the current price of option
contracts on a particular stock or future. It is represented as a percentage that indicates the annualized expected one
standard deviation range for the stock based on the option prices. For example, an IV of 25% on a $200 stock would represent a one standard deviation range of $50 over the next year.
