Explain the Concept of ‘Implied Volatility’ in the Context of Cryptocurrency Options Trading

Implied Volatility (IV) is a forward-looking measure representing the market's expectation of how much the price of the underlying cryptocurrency will fluctuate by the option's expiration date. It is derived from the current market price of the option itself.

High IV generally means higher option premiums, as the perceived risk of a large price move is greater. It is a key input in option pricing models like Black-Scholes.