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

Market fear causes a rush to buy Put Options for downside protection, driving up their prices and consequently the Implied Volatility.
Greeks.Live05.11.25

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.

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