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Understanding Implied Volatility


In simple terms, implied volatility is the amount of stock price fluctuations. Being on the right side of implied volatility changes can enhance the chances of success. In general, implied volatility increases when the market is bearish and decreases when the market is bullish. This is due to the common belief that bearish markets are more risky than bullish markets.

Consider selling strategies when options are being traded at high implied volatility levels.
Consider buying strategies when options are being traded at low implied volatility levels.

 

The following infographic explains some of the aspects of the Implied Volatility:

 

1. What is Implied Volatility?
2. 2 types of volatility.
3. How options are affected by Implied Volatility?

 

And more.

 

57484bbdff97eaf0706411070a1bfced.jpg

 

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