Historical volatility

Historical volatility (HV) measures how much a stock has actually moved over a specific past period, expressed as an annualized standard deviation of daily returns. Common lookback windows are 10, 20, 30, and 90 days.

Unlike implied volatility , which is forward-looking , HV is backward-looking. It tells you what the stock did, not what the market expects it to do.

Why the IV vs HV comparison matters: Comparing current IV to recent HV reveals whether options are cheap or expensive relative to actual realized movement. IV consistently overstates actual realized volatility over time , meaning options sellers have a structural long-term edge.

Reading the relationship:

• IV significantly above HV: Options are expensive , favorable for sellers
• IV significantly below HV: Options are cheap , favorable for buyers
• IV approximately equal to HV: No strong edge from volatility alone

Which lookback to use: For most comparisons, 30-day HV alongside 30-day IV gives the most relevant apples-to-apples comparison. Shorter lookbacks (10-day) are more sensitive to recent moves; longer lookbacks (90-day) smooth out short-term spikes.

Example: AAPL 30-day HV is 16%. Current IV is 30%. IV is nearly double recent realized movement , options are significantly overpriced relative to recent history, a classic premium-selling signal.

Related terms: Implied volatility, IV rank, IV percentile, Vega, volatility skew

Try it on Stryke: Compare live IV against historical volatility in the Options Screener.

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