IV Rankings

Use IV rankings to see how current implied volatility compares to its past year. It helps time premium selling or buying. It does not predict direction. It frames risk.

What is IV rankings?

• Definition: Where today’s IV sits between its 52-week high and low.
• Formula: (Current IV − 52W IV Low) / (52W IV High − 52W IV Low) × 100.
• Output: 0 to 100.
• 0 = IV is at the 52-week low. 100 = IV is at the 52-week high.
• It measures relative level, not speed or direction.
• Different from IV Percentile:
  • IV Rank uses only the high and low.
  • IV Percentile counts the % of days IV was below today.
  • Percentile is distribution-aware. Rank is range-aware.

Why it matters for options traders

• Premium selection:
  • High rank: richer options. Consider credit spreads or short premium (with defined risk).
  • Low rank: cheaper options. Consider debits or calendars/diagonals.
• Risk context:
  • High rank often precedes events. Moves can be violent.
  • Low rank can precede breakouts. Vol expansion risk.
• Greeks planning:
  • High rank: expect IV mean reversion risk. Negative vega helps.
  • Low rank: expect IV expansion potential. Positive vega helps.
• Sizing and timing:
  • Adjust width, duration, and hedges to IV regime.
• No guarantee:
  • IV can stay high or low for long periods.

Step-by-step with concrete numbers

• Example 1:
  • 52W IV High: 80%. 52W IV Low: 20%. Current IV: 50%.
  • IV Rank = (50 − 20) / (80 − 20) × 100 = 30/60 × 100 = 50.
• Example 2 (near lows):
  • High: 60%. Low: 15%. Current: 18%.
  • IV Rank = (18 − 15) / (60 − 15) × 100 = 3/45 × 100 ≈ 6.7.
• Example 3 (above prior high, cap at 100):
  • High: 70%. Low: 25%. Current: 75%.
  • Raw = (75 − 25) / 45 × 100 ≈ 111. Cap to 100.
• Interpreting numbers:
  • 0–25: historically low. Debit trades, calendars often fit.
  • 25–50: mid. Mixed approaches.
  • 50–75: elevated. Credit trades with defined risk.
  • 75–100: very high. Event risk likely. Hedging is key.
• Simple vega impact check:
  • Option vega: 0.12. IV drops 10 points after earnings.
  • Price change ≈ 0.12 × 10 = $1.20 decrease (all else equal).
  • Plan strikes and sizing for potential IV crush.

Common mistakes & risk

• Confusing IV Rank with IV Percentile.
• Using different IV sources (ATM vs 30-day vs blended) without consistency.
• Ignoring realized volatility. IV can be “high” for good reason.
• Assuming mean reversion will be fast. It may not.
• Trading through earnings solely because rank is high.
• Ignoring skew. OTM puts/calls may carry different IV behavior.
• Using illiquid tickers. Wide spreads add slippage.
• Not capping calculations to 0–100 when IV breaches extremes.
• Overleveraging short premium in high-rank regimes.
• Forgetting assignment, margin, and gap risks.
• This is not investment advice.

Analyze with ImpliedOptions

• Check live ranks:
  • Visit our IV rankings tool to scan iv rankings by ticker.
• Build a plan:
  • Sort by rank. Pick candidates that fit your thesis and liquidity rules.
  • Open Strategy Builder to structure credit or debit positions.
  • Test scenarios with Profit Calculator for price and IV changes.
• Practical tips:
  • Align duration with catalyst dates.
  • Use defined risk in high ranks.
  • Re-check ranks daily. Regimes shift.

FAQ

• What is a “good” iv rankings number?

  • There is no universal “good.” >50 means above mid-range. <25 is low. Use with context.

• Which IV should I use for rank?

  • Common: 30-day ATM IV. Some use blended or term-specific IV. Be consistent.

• How often should I update iv rankings?

  • Daily for most tickers. More often near events.

• Does iv rankings predict price direction?

  • No. It reflects option pricing for expected movement, not bullish or bearish bias.

• IV Rank vs IV Percentile: which is better?

  • They answer different questions. Many traders monitor both.