Define “Implied Volatility” and How an Oracle Might Provide Data for Its Calculation

Implied volatility (IV) is a forward-looking measure representing the market's expectation of the underlying asset's price fluctuation over the option's life. It is derived from the option's market price using an option pricing model, such as Black-Scholes.

An oracle does not directly provide IV. Instead, an oracle provides the core inputs needed for the IV calculation, specifically the current, reliable spot price of the underlying asset and potentially the risk-free interest rate.