IV = Implied Volatility

Implied Volatility is computed from options prices, using Black-Scholes formula. Black-Scholes formula, originally designed to compute the price of an option using volatility as an input, is re-arranged, using actual market prices of the options, calculating volatility the given price implies. Implied Volatility is the market’s expectation of future volatility of a given asset, and typically differ from historical volatility.