# Implied Volatility vs. Historical Volatility

By [Term Structure Academy](https://paragraph.com/@term-structure-academy) · 2024-02-29

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Implied Volatility (IV): This is a market-derived estimate of future volatility embedded in the current prices of options. It reflects the market's expectations for future price fluctuations of the underlying asset.

Historical Volatility (HV): This is a measure of past price fluctuations. It calculates the volatility based on historical price data over a specific period.

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*Originally published on [Term Structure Academy](https://paragraph.com/@term-structure-academy/implied-volatility-vs-historical-volatility)*