Implied volatility (IV) is the market's estimate of how much a stock will move. It does not predict direction — it prices uncertainty. Two traders can be right about direction and still get opposite results because of IV.

High IV vs low IV

  • High IV: options are expensive; selling premium is favoured.
  • Low IV: options are cheap; buying premium is favoured.

Watch the crush

After earnings or a scheduled event, IV often collapses. A long option can lose value even when the stock moves your way — the classic "I was right and still lost" trap.

Trade the volatility regime, not just the chart.