Regarding the implied standard deviation, by plugging in the actual option premium paid by investors for a specific stock in the option pricing model, it is possible to derive the anticipated volatility level.

Question

Quizplus · Accepted Answer

The implied standard deviation or implied volatility is derived by inputting the actual market price of an option into an option pricing model (like the Black-Scholes model) and solving for the volatility variable. This reflects the market's expectations of the stock's future volatility.

Regarding the Implied Standard Deviation, by Plugging in the Actual