Implied vs. Historical Volatility: Which Better Predicts Future Realized Volatility?

A discussion piece examines whether option-implied or historical volatility is the better forecaster of future realized volatility. It finds that implied volatility is generally the stronger standalone predictor, since it reflects market expectations and updates quickly as new information arrives. Historical volatility, computed from past returns, is simple to calculate and benefits from volatility clustering, but it looks only backward. The author notes implied volatility often overshoots subsequent realized volatility because option prices embed a volatility risk premium. The suggested practice is to combine horizon-matched implied volatility with rolling realized or GARCH-based estimates, calibrate for bias, and validate across regimes and horizons.