Explain the Term “Implied Volatility” and Its Significance for Options Traders in a Highly Volatile Crypto Market

Implied volatility (IV) is the market's expectation of how much an asset's price will fluctuate in the future, derived by working backward from the current option price using a pricing model. In the highly volatile crypto market, IV is crucial because it is the largest factor in an option's premium.

High IV means options are expensive, reflecting the market's expectation of large price swings, which significantly impacts a trader's strategy and pricing decisions.