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Implied volatility

A Theoretical value designed to represent the Volatility of the security underlying an Option as determined by the price of the option. The factors that affect Implied volatility are the Exercise price, the riskless rate of Return, Maturity date and the price of the option. Implied volatility appears in several Option pricing models, including the Black-Scholes Option Pricing Model.

Related Terms: 17 CLU, ECU, Exercise, Factor, Inc., Implied volatility, Maturity, Maturity date, Mode, Option, Return, Risk, Rate of return, SEC, Term, Theoretical value, Volatility
Other Related Pages: Category: Options Starting With: I
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