Implied Volatility

Explanation

Implied volatility (IV) is forward-looking — it reflects what traders expect future volatility to be, not what it has been historically. High IV means options are expensive (market expects large moves). Low IV means options are cheap (market expects calm). IV tends to increase before earnings announcements, FDA decisions, and other binary events. The volatility smile describes how IV varies across strike prices — out-of-the-money puts typically have higher IV than calls, reflecting demand for downside protection.

How Stoquity Uses This

Stoquity incorporates implied volatility analysis across its portfolio management platform, providing real-time monitoring and AI-powered insights for every portfolio.