How Does “Historical Volatility” Differ from Implied Volatility?

Historical volatility (HV) is a backward-looking measure, calculated based on the actual, recorded price fluctuations of the underlying asset over a specific past period. Implied volatility (IV), conversely, is a forward-looking measure derived from the current market price of an option, representing the market's expectation of future volatility.

HV describes what has happened; IV describes what the market thinks will happen.