Implied Volatility (IV)

How Draconic reads it

Implied volatility is the volatility that, when plugged into an options pricing model, produces the observed market price for the option. When IV rises, options premiums expand because the market expects larger future moves. When IV collapses after an event resolves — regardless of which direction price moved — premiums collapse, which is why directionally correct options trades around events can still lose money. IV percentile contextualises the current reading: IV at its 90th historical percentile is expensive; at its 10th percentile, it is cheap. Neither high nor low IV is automatically a signal to buy or sell options; but IV context changes which strategies carry positive expected value in current conditions.