How Does the Concept of ‘Implied Volatility’ Affect the Premium of a Crypto Option?

Implied volatility (IV) is the market's expectation of how much the underlying cryptocurrency's price will fluctuate in the future. IV is the most significant factor in an option's premium calculation.

Higher IV means the market expects larger price swings, increasing the probability of the option becoming ITM, thus leading to a higher premium for both calls and puts.