The implied volatility of an option is the volatility implied by the option price and the observable determinants of option value.

Question

Quizplus · Accepted Answer

The definition of implied volatility is accurate. It is the volatility that is implied by the option price and the observable determinants of option value, such as the underlying asset price, strike price, time to expiration, interest rate, and dividends.

The Implied Volatility of an Option Is the Volatility Implied