What's the rational for using implied volatility rather than historical volatility? Historical volatility is the actual known behavior of the underlying security.
Implied volatility is key because it reflects the market’s expectations for future movements, not past trends. Traders often prioritize these forward-looking insights over historical data. (See implied volatility rank definition on tastytrade, IV vs. HV simplified for one year timeframe)
1 Comment
Implied volatility is key because it reflects the market’s expectations for future movements, not past trends. Traders often prioritize these forward-looking insights over historical data. (See implied volatility rank definition on tastytrade, IV vs. HV simplified for one year timeframe)