Derivatives & Risk

What is the difference between implied and realized volatility?

Implied volatility and realized volatility describe price movement from different vantage points. Realized volatility is backward-looking, measuring how much an asset actually moved over a past period. Implied volatility is forward-looking, derived from current option prices, and reflects the market's expectation of future movement. When implied sits well above realized, options look expensive relative to recent behavior. For example, options may price in 80 percent implied volatility while Bitcoin realized only 50 percent. The gap between the two is a core input for options pricing, and trading on it carries risk.

Crypto investments are subject to market risk and volatility. Past performance is not indicative of future returns. This is general information, not investment advice — consider your own circumstances or consult a qualified adviser before investing.