What Is the Difference between Implied Volatility (IV) and 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 market price of the option, representing the market's expectation of future price movement.

HV is an objective, calculated statistic, while IV is a subjective, market-driven expectation.