Volatility

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Historical Volatility

https://www.investopedia.com/terms/h/historicalvolatility.asp
Historical volatility (HV) is a statistical measure of the dispersion of returns for a given security or market index over a given period of time. This measure is calculated by determining the average deviation from the average price of a financial instrument in the given time period. Using standard deviation to calculate historical volatility. The higher the historical volatility value, the riskier the security.

https://www.fool.com/knowledge-center/how-to-calculate-annualized-volatility.aspx

Implied Volatility

Implied volatility is the parameter component of an option pricing model.

Not directly observable, so it needs to be solved using the five other inputs of the model:

• the market price of the option
• the underlying stock price
• the strike price
• the time to expiration
• the risk-free interest rate

https://www.investopedia.com/ask/answers/032515/what-options-implied-volatility-and-how-it-calculated.asp

Difference between Implied Volatility &. Historical Volatility

• Implied or projected volatility is a forward-looking metric used by options traders to calculate probability.
• Implied volatility, as its name suggests, uses supply and demand, and represents the expected fluctuations of an underlying stock or index over a specific time frame.
• With historical volatility, traders use past trading ranges of underlying securities and indexes to calculate price changes.
• Calculations for historical volatility are generally based on the change from one closing price to the next.

https://www.investopedia.com/articles/investing-strategy/071616/implied-vs-historical-volatility-main-differences.asp