implied volatility

Implied volatility is a measure of the market's expectations for how much a stock's price might fluctuate in the future. It’s derived from the prices of options on that stock; higher implied volatility suggests that the market anticipates larger price swings, while lower implied volatility indicates expected stability. Essentially, it reflects the uncertainty or risk investors perceive about the stock’s future performance. If investors believe a stock could experience significant changes, implied volatility rises, affecting the cost of options related to that stock.