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Implied Volatility Calculator

Use this calculator to calculate implied volatility of an option, i.e., volatility implied by current market price of the option. Black Scholes model assumes that option price can be determined by plugging spot price, exercise price, time to expiry, volatility of the underlying and risk free interest rate into Black Scholes formula. However, the observed option prices in practice do not always match with the theoretical prices computed using BS formula. By using market price of the option as a known variable in the BS formula, underlying volatility can be back calculated and the volatility calculated this way is known as implied volatility. Implied volatility represents market expectation of the volatility and it is often used to check if an option is under or over priced.

Option Type
Spot Price  
Strike Price  
Risk Free Rate %  
Time To Expiry Days  
Market Price  
%