Expected variability — not a direction forecast.
| Concept | Explanation | |---|---| | Implied volatility | Future variability embedded in option prices. | | Volatility index | Index derived from option-implied volatility over a defined horizon. | | Volatility spike | Rapid rise in expected variability and demand for protection. | | Volatility crush | Sharp decline in implied volatility after uncertainty resolves. | | Term structure | Relationship between short- and longer-dated implied volatility. | | Realized volatility | Actual historical price variation. |
A volatility index is not a direct forecast of market direction. High volatility often accompanies stress, but elevated readings can persist.