Implied Volatility (IV) in Option Chains: The Hidden Market Sentiment. How IV affects option pricing
The rate at which security rises and falls is measured by volatility. Volatility is high when a security moves swiftly up and down. In contrast, volatility is low when a security moves slowly up or down.
Historical volatility (also known as realized volatility) is a recording of how the underlying really moved over a set time period, whereas implied volatility is a measure of what the options markets predict volatility will be over a given period of time (until the option's expiration).