Realized and implied volatility
Realized volatility describes how an exchange rate moved over a chosen past sample. Implied volatility is backed out of option prices using a model and contract assumptions. One is a historical measurement; the other is part of the price of future uncertainty. Neither tells you which way a currency must move.
A quiet daily chart can coexist with expensive options if a policy decision or other event lies ahead. Daily reference data also misses intraday spikes, so it should not be used to conclude that short-term risk was absent.
Events, expiries and skew
An option expiring just before a central-bank meeting has a different event exposure from one expiring just after it. Compare the events included in the time remaining rather than choosing the shortest expiry simply because it has the lowest cash premium.
Calls and puts at different strikes can imply different volatility. This skew reflects how the market prices different tails of the distribution and can change with hedging demand. “The volatility” is therefore incomplete without specifying expiry, strike or delta convention and the currency pair.
A correct event view can still lose money
A bought straddle pays for both a call and a put. If the post-event move is insufficient to cover their combined cost, a directionally dramatic headline does not make the trade profitable. Implied volatility can fall after uncertainty is resolved, reducing time value before expiry.
Short-volatility positions collect premium while accepting adverse-move risk. A long history of small gains is not evidence that the next jump is covered. Compare straddles, strangles and currency strategy choices; keep quote direction and contract sizing consistent across every leg.
Sources and further reading
Official references for the mechanisms and contract conventions discussed here. Follow the provider’s current contract rules when evaluating an actual product.