Implied Volatility

Market’s expected annualized price fluctuation of an asset, derived from option prices.

What is Implied Volatility?

Implied volatility (IV) estimates future asset price movement as implied by option premiums, expressed as a percentage; higher IV inflates option costs. For MSTR, IV at 60.6% as of recent data ranks in the 35th percentile over the past year, driven by Bitcoin exposure.

In Strategy’s converts, high IV (e.g., 80%) makes embedded options valuable, lowering effective interest but increasing sensitivity; a drop to 50% could reduce convert values by 13%.