The implied volatility of an option
A)Is the volatility that would have to be plugged into a given option-pricing model to obtain the observed market price.
B)Can only be calculated using the Black-Scholes model.
C)Is the volatility implied by the underlying stock price over a given historical period.
D)Is equal to the volatility that will actually be realized over the life of the option.

Question

Quizplus · Accepted Answer

The implied volatility can be defined relative to any option-pricing model,not jsut Black-Scholes,though the latter is commonly used.

The Implied Volatility of an Option