Glossary / Instruments
Implied volatility
Definition
The volatility the market is pricing into an option.
Why it matters
Buying high IV before an event and holding through the crush is the most common way option buyers lose on a correct directional call.
Example
Buying a 60 IV option into earnings and holding through the print often loses money even when direction is right, because IV collapses to 30 the next morning.
How to track it in a journal
TradeStack calculates the core performance numbers — win rate, average win and loss, profit factor, expectancy, drawdown and consistency — automatically from imported trades, so implied volatility stops being something you estimate and becomes something you read.
Related terms
Tick value
The dollar value of the smallest price increment of a contract.
Pip
The standard smallest price move in a currency pair, usually 0.0001.
Lot size
The trade unit in forex: 100,000 units for a standard lot.
Contract specifications
The exchange definition of a futures contract: size, tick, hours and expiry.
Keep reading
Trading journal guides
Expectancy, profit factor, drawdown, backtesting and the PDT rule.
Free trading calculators
Position size, risk-reward, expectancy and options profit.
Expectancy calculator
Expected profit per trade from your own numbers.
Broker CSV export guides
Step-by-step exports for Tradovate, NinjaTrader, IBKR and more.
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