How Does IV Differ from Historical Volatility (HV)?

Historical Volatility (HV) is a backward-looking measure, calculated from the past price movements of the underlying asset over a specific period. Implied Volatility (IV) is a forward-looking measure, derived from the current option price, representing the market's expectation of future price movements.

HV is an input for analysis, while IV is an output of option pricing models and a reflection of market sentiment.