> For the complete documentation index, see [llms.txt](https://guide.laevitas.ch/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://guide.laevitas.ch/concepts/implied-volatility.md).
# Implied Volatility
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**Implied volatility** refers to the one standard deviation range of expected movement of the underlying’s price over the course of a year.
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#### **Implied Volatility (IV)**
It is the one standard deviation range of expected movement of the underlying’s price over the course of a year.
For example, if Bitcoin has an implied volatility of 50% and it is currently trading at $50,000, it is expected to move between ±50% of the current price over the course of a year, or range between $25,000 and $75,000 with a 68.2% probability of accuracy (1 standard deviation).
### **Implied Volatility as a Normalized Measure**
For options traders, it is crucial to know if an option is cheap or expensive relatively to those with a different strike price or expiration.
**Implied volatility is derived from options prices, so changes in options prices affect IV. Not the other way around.**
By just looking at the dollar cost of an option it would be quite difficult to tell if it was relatively cheap or expensive as there are several other variables that affect an option’s price other than just the current price of the underlying asset.
Since the implied volatility figure for each option is annualised (a.k.a normalised), a comparison can be made between options from different expiry dates.
### **Different Time Periods, Fairly Annualized**
Some metrics in Laevitas provide IV in different time periods (7, 30, 60, 90, 180, 365 Days).
In the above chart, IV 7 Days show the Implied Volatility of At-The-Money(ATM) option over the past 7 days as an annualized figure, at 160.731%.
This is useful to help understand the state of implied volatility in comparison for this time period with another time period, say, the past 30 days which stands at 129.299%.
In other words, on 12th May, the past 7 days has been “more volatile” than in the past 30 days.
### **IV Plays**
Implied Volatility of the option itself is an useful normalized value which helps identify cheap option buying or lucrative option selling opportunities.
High IV environments allow traders to collect more premium, or move strikes further away from the underlying price and still collect a decent premium for short options strategies.
Low IV environments allow traders to speculate on long premium directional strategies at a lower cost than they would have to pay in a high IV environment, due to the lower extrinsic value and expected moves across the board.
### **Does IV of more than 100% mean that the price may go below $0?**
In traditional finance, volatility is usually measured and quoted in **percent annualized.**
Instead of looking at IV as a definitive percentage movement of the stock, it should be used as a measured comparison of volatility in its original intended meaning.