what is implied volatility 
volatility is the up and down movement of a stock s price over a prescribed period it can be historical and based on past fluctuations or it can be implied and effectively forecasted it s not firm but rather an estimate that traders can and should use to gauge their best and most advantageous moves particularly if they re dealing in naked options 3the bottom linenaked options are sold without any reserves to guarantee the obligation price changes can run rampant between the time of sale and expiration and the seller or writer doesn t necessarily own enough or even any of the underlying security to meet their obligations they re highly vulnerable to loss and shouldn t be attempted by an inexperienced trader at least not without first getting solid experienced advice and guidance from a professional the comments opinions and analyses expressed on investopedia are for informational purposes online read our warranty and liability disclaimer for more info 