How to Use the Implied Volatility Calculator

This calculator provides a simplified approximation of implied volatility for options trading. Here’s how to use it:

Step-by-Step Guide

1. Enter Option Price (₹)

• Input the current market price of the option contract

1. Enter Strike Price (₹)

• Input the strike price of the option contract

1. Enter Current Stock Price (₹)

• Input the current market price of the underlying stock

1. Enter Time to Expiry (days)

• Input the number of days remaining until the option expires

1. Enter Risk-Free Rate (%) (optional)

• Input the current risk-free interest rate (defaults to 5% if left blank)

1. Select Option Type

• Choose between “Call Option” or “Put Option” from the dropdown menu

1. Click “Calculate IV”

• The calculator will display the estimated implied volatility percentage

Important Notes

• This calculator provides a simplified approximation of implied volatility
• For precise calculations, professional trading platforms use iterative methods (like Newton-Raphson) to solve the Black-Scholes equation
• The result is expressed as an annualized percentage (e.g., 25.50% means the stock’s expected annual volatility is about 25.5%)

Example Calculation

For a call option with:

• Option price: ₹15
• Strike price: ₹100
• Stock price: ₹95
• 30 days to expiry
• Risk-free rate: 5%