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What is Historical Volatility?

tasty Extras

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Historical volatility is used to see what actually happened whereas implied volatility is used to see what the market is expecting to happen.

The two metrics are comparable because they both are based off of standard deviations, and when comparing IV to HV over time, we saw that 83% of the time, the volatility that IV was predicting over the next 30 days was higher than the actual volatility we saw over those 30 days.

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