Implied Volatility vs Volatility Term Structure

The annualized standard deviation of price returns implied by the current market price of an option, derived by solving the Black-Scholes model backwards from observed market price; forward-looking measure of expected future volatility; distinct from historical volatility which measures past realized movement.

The pattern of implied volatility (IV) across different expiration dates for the same underlying asset and strike price, reflecting market expectations for volatility at different timeframes.