For any given stock in Interactive Broker's TWS (and I bet with any other broker), there is an option's historical volatility and an option's implied volatility. I know the historical volatility is the annualized standard deviation of the stock. But how is the implied volatility determined?
I am aware that the implied volatility is the volatility the market expects in the future. But how far in the future? Is it the implied volatility using options that will expire in one year? Is it the implied volatility using options of expiry of one month? Is it determined using at-the-money or in-the-money options? Is it the average implied volatility of all the options?
I don't need to know the mathematical model used (if it's based on Black Scholes or not). I would just like to know some general information about how the stock's IV is determined. i.e What options with what strike prices and expiry dates are used to determine the IV?
Thanks in advance.