Implied Volatility (IV) in Crypto & the Volatility Smile
Implied Volatility (IV) is the expected volatility of the underlying priced into an option. The IV curve across strikes forms the "volatility smile".
What is implied volatility
Implied volatility is the volatility the market prices into an option: the higher the IV, the more expensive the option and the bigger the BTC move participants expect. IV rises in stress and falls in calm markets.
The volatility smile (IV smile)
Plot IV across strikes for one expiry and you get a smile-shaped curve: out-of-the-money options (OTM calls and puts) usually carry higher IV than the center. The smile asymmetry (skew) shows what the market pays a premium for — downside protection or upside.
The 25-delta risk reversal numerically measures the smile skew. In Crypto Metrics Pro, IV data comes from Deribit.
FAQ
The market expected volatility of the underlying priced into an option. High IV means expensive options and expectations of big moves.
The shape of the IV curve across strikes, where the wings (OTM) are richer than the center. Its asymmetry is measured by the risk reversal.
See Implied Volatility & Volatility Smile live for BTC and ETH in the GEX Terminal module.
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Information is for analytical and educational purposes only and does not constitute investment advice. Cryptocurrency trading carries high risk.