Skip to main content
Learn

What Is the Relationship between Implied Volatility and Option Premium?

Higher implied volatility leads to a higher option premium because it signals a greater expectation of price movement.
Greeks.Live04.11.25

What Is the Relationship between Implied Volatility and Option Premium?

Implied volatility (IV) is directly and positively correlated with an option's premium (price). Higher IV reflects greater market expectation of large price movements, increasing the probability that the option will expire in-the-money.

This increased probability of profit makes the option more valuable, leading to a higher premium.

What Is the Relationship between Interest Rates and Option Premium?
How Does Implied Volatility Affect the Premium of an Option?
Does Historical Volatility or Implied Volatility Matter More for Premium Pricing?
How Does Implied Volatility (IV) Affect an Option’s Premium?

About

Contact

Editorial Policy

Terms of Service

Privacy Policy

Cookie Policy

© 2025 Greeks.Live

All Rights Reserved

Greeks.Live RFQ

Build by Noo on Engine

Source: The content on this website is produced by Greeks.live's proprietary analysis systems, which utilize advanced Large Language Models (LLMs). This information might not be subject to a full human review before publication and may contain errors.
Responsibility: You should not make any financial decisions based solely on the content presented here. We strongly urge you to conduct your own rigorous due diligence and to consult a qualified, independent financial advisor.
Purpose: All information is intended for informational purposes only. It should not be construed as financial, investment, trading, or any other form of professional advice. News and data are not trading signals.
Risk: The cryptocurrency, derivatives, and options markets are highly volatile and carry significant risk. By using this site, you acknowledge these risks and agree that Greeks.live and its affiliates are not responsible for any financial losses you may incur.