Implied volatility is a metric that captures the markets view of the likelihood of changes in a given securitys price. It is a measure of perceived volatility and is forward-looking, representing the expected volatility in the future. Implied volatility is an essential ingredient in options pricing, and it is used to price options contracts where high volatility is expected. It is computed using an options-pricing model and reflects the markets expectations for the future volatility of the underlying stock. Implied volatility is one of the deciding factors in the pricing of options, and it estimates the future value of an option while considering its current value. When implied volatility increases, the price of options will increase as well, assuming all other things remain constant. Conversely, when implied volatility decreases, the price of options will decrease. Implied volatility is directly influenced by the supply and demand of the underlying options and by the markets expectation of the share prices direction. It is important to note that implied volatility is based on general consensus in the marketplace and is not an infallible predictor of stock movement.