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Implied vs Realized Volatility
Implied versus realized volatility compares the volatility reflected in option prices with the volatility actually experienced by the underlying asset.
Why it matters to you
A trader buying options is not simply making a directional decision. They are also paying a price influenced by the market's expectation of movement. If options price unusually large movement and the realized movement turns out much smaller, option buyers may struggle even when their directional view was broadly correct.