Why Does IV Tend to Rise When the Market Is Falling? ⎊ Path

Why Does IV Tend to Rise When the Market Is Falling?

Implied Volatility tends to rise when the market is falling because market participants rush to buy Put Options for downside protection. This sudden surge in demand for Puts drives up their prices, and since IV is derived from option prices, the IV rises, reflecting increased fear and expected future volatility.

Why Is Implied Volatility Often Called the ‘Fear Gauge’ of the Market?

How Does a Sharp Rise in Implied Volatility Affect the Value of Out-of-the-Money Put Options?

What Is a “Volatility Skew” and What Does It Imply about Market Expectations?

Why Would an Investor Choose an OTM Put over an At-the-Money (ATM) Put?

What Is the Concept of “Volatility Skew” in Options Markets?

How Does Volatility Impact the Cost of the Purchased Put?

How Does the Concept of “Volatility Skew” Affect Pricing for OTM Crypto Options?

What Is the Concept of “Volatility Skew” and How Does It Relate to Market Fear?