When Is IV Typically Higher than HV? ⎊ Path

When Is IV Typically Higher than HV?

Implied volatility (IV) is typically higher than historical volatility (HV) when the market anticipates significant future price-moving events or when there is high uncertainty. This difference is often referred to as the volatility risk premium, which benefits option sellers.

What Is the Volatility Risk Premium?

How Do Major Market Events (E.g. Halving) Typically Affect Implied Volatility in Crypto Options?

What Market Condition Typically Justifies Buying Short-Term IV and Selling Long-Term IV?

When IV Is Significantly Higher than HV, What Does This Suggest about the Market’s Sentiment?

Why Do Longer-Term Options Naturally Incorporate More Potential Future Uncertainty?

How Do “Halving” Events Affect the Long-Term Inflation Rate of a Token?

Can Implied Volatility Be Higher than Historical Volatility, and What Does That Suggest?

What Are the Limitations of ‘Code Is Law’ When Dealing with Unforeseen Events?

Glossar

Historical Volatility

Evidence ⎊ This metric is derived from the time-series of past asset prices, representing the actual realized dispersion of returns over a defined historical window.

Price-Moving Events

Catalyst ⎊ Price-moving events, particularly within cryptocurrency derivatives and options, frequently originate as catalysts ⎊ unexpected occurrences that fundamentally alter market expectations.