What Is the Difference between ‘Implied’ and ‘Historical’ Volatility?

Historical volatility (HV) is a backward-looking measure, calculated from the past price movements of an asset over a specific period. Implied volatility (IV) is a forward-looking measure, derived from the current market prices of the asset's options contracts.

HV tells you what volatility has been , while IV tells you what the market expects volatility to be in the future, making IV the more critical input for options pricing.