How Do Options Traders Use Volatility, Which Is Conceptually Similar to Hash Rate Fluctuations?

Options traders use volatility, specifically implied volatility (IV), as a key input in pricing models like Black-Scholes. High IV suggests higher future price swings, increasing the probability of an option moving in-the-money, thus increasing the option's premium (time value).

Traders buy options when they expect IV to rise (and premiums to increase) and sell options when they expect IV to fall. This is a core concept in options trading.