What is implied volatility, in plain words?
Implied volatility is the size of swing in the stock that an option's price assumes, written as a percentage a year. It isn't measured from the past: it is worked backwards from the option's price with a pricing formula. High implied volatility means the price assumes big moves and the option costs more; low means small moves and a cheaper option.
Try it: a $50 stock and a 30-day call with a $50 strike (made-up numbers). Change the implied volatility and see the price, and the typical move it assumes.
Simulated example, priced by the StrikePath engine (Black–Scholes, interest 4.3% a year). For learning; not advice.
From a percentage a year to a move you can picture
A yearly figure shrinks with the square root of time: over 30 days, 30% a year is about 30% × √(30/365), or 8.6%, so a $50 stock's typical move is about $4.30 either way. That is one standard deviation: under the formula's bell-curve assumption, the stock ends inside that range about two times in three.
Why it rises and falls
It rises when the market expects bigger moves, before a company reports or after a sharp fall, and often falls once the news is out (traders call that the volatility crush). Because the option's price moves with it, an option can gain or lose value with the stock standing still.
What this shows, and what it doesn't
One volatility for one option here. Real options on the same stock carry different implied volatilities at different strikes and expiries (the smile and the term structure), and real moves can be larger than a bell curve allows.