what is iv in option chain

Implied Volatility (IV) is a metric that captures the markets view of the likelihood of changes in a given security's price. In options trading, IV is a critical data point that indicates how volatile the market may become in the future and can aid in probability calculation. IV is a fundamental prediction of how much market movement is expected regardless of the direction of the price change. IV is one of the six essential factors used in options pricing models, and it is directly related to the option premium. IV represents the current market price for volatility or the fair value of volatility based on the market's expectation for movement over a defined period of time. IV can't be calculated unless the remaining other five factors are already revealed. Supply and demand and time value are major determining factors for calculating implied volatility. Implied volatility usually increases in bearish markets and decreases when the market is bullish. When trading options become unpredictable, this leads to an increase in implied volatility, referred to as IV expansion, because the option prices are likely to increase. When the market scope becomes relatively stable, this is called IV contraction because here, it is a decrease in implied volatility and option prices.