Intermediate

Implied Volatility Quiz

By Dennis Bosmans · Updated June 2026 · 2 min read · Risk disclaimer

Implied volatility drives option prices as much as the stock itself. These six questions check that you know how it behaves.

Pick an answer for each question — your score appears at the end.

1. Question 1Implied volatility is derived from…

   Historical returnsThe option’s market priceThe dividendThe delta

   IV is the volatility that, fed into a pricing model, reproduces the option’s market price.

2. Question 2Higher implied volatility makes option premiums…

   CheaperMore expensiveUnchangedNegative

   More expected movement means more value, so premiums rise with IV.

3. Question 3IV that is high before earnings and drops sharply afterward is called…

   ContangoIV crushSkewBackwardation

   Once the uncertainty resolves, IV collapses — the well-known IV crush.

4. Question 4When out-of-the-money puts carry higher IV than calls, the pattern is called…

   A smileVolatility skewIV crushDrift

   Equity options usually show a skew: downside puts are bid up for protection.

5. Question 5Option SELLERS generally benefit when IV…

   RisesFallsStays flat foreverGoes negative

   Selling rich premium and watching IV fall lets sellers buy it back cheaper.

6. Question 6Implied volatility is usually quoted as…

   A dollar amountAn annualized percentageA number of daysA delta

   IV is expressed as an annualized percentage of the underlying’s price.

Educational use only. Quotes are delayed ~15 minutes and nothing here is financial advice. Options trading involves substantial risk of loss. Privacy Policy · Terms & Conditions.