Implied Volatility (IV)

IV isn't a forecast of direction, only magnitude — it rises ahead of known catalysts (results, policy events, budget day) and typically falls sharply once the event passes, regardless of which way the market moved. High IV means richer premium on both sides of the chain: good for sellers writing straddles and strangles, expensive for buyers of straight calls and puts.

Example: NIFTY's IV might sit around 11-12% through a quiet week, then spike to 16-18% heading into a budget session or an RBI policy day — the chain pricing in the uncertainty before the event, then typically collapsing back down within a session or two of the outcome being known.