Unlike historical volatility, which measures how fast stock prices changed in the past, Implied Volatility (IV) is a forward-looking metric. It represents the stock market's expectations of a security's future price movement over a specific timeframe.

When Implied Volatility rises, it increases the extrinsic value of all options at every strike price—including both Calls and Puts. This occurs because the mathematical model assumes that a higher volatility increases the statistical probability of the stock reaching further extreme strike prices before expiration.