Implied Volatility (IV) in Option Chains: The Hidden Market Sentiment. How IV affects option pricing

Implied Volatility (IV) in options trading represents the market's expectation of future volatility of the underlying asset, directly influencing option pricing. It is expressed as percentage (%). High IV indicates a higher expectation of price swings, leading to more expensive options, while low IV suggests a more stable outlook, resulting in cheaper options. IV is a key factor in option pricing, influencing both call and put options. It's derived from the market price of an option and reflects what the market is signaling about the future volatility of the underlying asset, essentially acting as a gauge of market sentiment.
Implied Volatility is a forward-looking estimate. It isn’t a guaranteed prediction but it provide a valuable insights to the investors or traders. It can be used by traders for various ways like option pricing, volatility trading, risk management, etc.