Implied volatility is the volatility that is measured by observing the prices (bids and offers) of market makers quotes. True/Market Volatility is the volatility of the actual underlying over a certain time period. Suggest a reason or example of why the implied volatility maybe much higher or lower than the average market volatility of the last week? For example, option prices give an implied volatility of 15 but the underlying has been moving with a volatility of 10 for the last week.