It only shows whether the move will be high or low.

Implied volatility does not indicate how the security price will move.It helps in understanding whether the price movement will be too high or low, which gives an idea to the investors on how much to invest in security.An investor or a trader can formulate their trading strategy by analyzing an option’s implied volatility.

It measures the uncertainty of any change in the security price based on the market sentiment.Option prices are decided based on implied volatility.Inversely, if the market expectations fall or demand for the security drops, implied volatility also decreases and decreases the options premium price component. If market expectations increase or demand increases, implied volatility increases, increasing the options premium price component. It relies on market consensus and depicts the outlook of the market. The symbol used to denote Implied Volatility is σ (sigma). It is based on certain factors (which include the market expectation of the security’s price) that impact the price of a security and are usually expressed in percentage of the stock price, indicating a standard deviation that relates to a specific period. It helps investors where their investment will move in the future by forecasting the supply & demand and the security price movement, which in turn helps to understand the price of options contracts. Implied volatility (IV) measures the likelihood of a change in the price of a security.

$nvda implied v