What Role Does Implied Volatility Play in the Premium of a Cryptocurrency Option?

Implied volatility (IV) is a forward-looking measure representing the market's expectation of how much the underlying cryptocurrency's price will fluctuate in the future. IV is the most significant factor in determining an option's premium.

Higher IV means a higher option premium because there is a greater probability of the option expiring in-the-money. A DAO selling options benefits from high IV, while a DAO buying options pays a higher price for the increased potential movement.