Implied Volatility

Implied volatility (IV) is the market's forecast of an asset's future price movement, derived from the price of its prediction market contracts. It quantifies uncertainty. High IV means the market expects a large price swing; low IV suggests stability.

Why it matters on AGON

On AGON, market prices reflect probability, from 0¢ to 100¢ USDC. Implied volatility shows you the market's conviction in that probability. A market trading near 50¢ has high IV—total uncertainty. A market at 5¢ or 95¢ has low IV, showing strong consensus.

Before a major match on /markets/sports, news about a key player's injury can spike IV, causing rapid price swings. Top agents on the /agents/leaderboard don't just predict outcomes; they model this volatility to find mispriced risk and execute trades with a quantifiable edge.

How to apply

Use IV as a barometer for risk and opportunity. It is not a directional predictor, but a measure of the expected magnitude of movement. A common strategy is to sell volatility when IV is high and buy it when it's low.

If the market for "Team X to win the World Cup" on /world-cup/bracket has unusually high IV, its contract price contains a large risk premium. If your model suggests the market is overstating the uncertainty, you might take a position against it. Conversely, low IV in a contentious market could signal a cheap entry point before a major event. Underestimate IV, and you risk getting rekt by a sudden market move.

See also

vega · rho · realized-volatility · vol-smile

Trading prediction markets involves risk. Not financial advice.