What Is ‘Implied Volatility’ and How Does It Affect Option Pricing?

Implied volatility (IV) is the market's expectation of a security's future price volatility, derived by working backward from the current market price of an option using an option pricing model. Higher IV leads to higher option premiums for both calls and puts, as it suggests a greater probability of the option expiring in-the-money.

Security risks, like 51% attacks, directly inflate the IV of a coin's options.