Reading the market
IV rank in plain English, and what to do at 80+
IV rank tells you whether options are expensive or cheap relative to the past year. The number itself is easy. Knowing what to do with it is the work.
Implied volatility on its own is not useful. Saying "TSLA IV is 45" tells you almost nothing because you do not know whether 45 is high or low for TSLA. fixes that by scaling current IV against the past year's range.
The math
IV Rank = (current IV − 52-week low IV) / (52-week high IV − 52-week low IV) × 100.
IV Rank of 0 means today's IV is at the lowest point of the past year. IV Rank of 100 means today's IV is at the highest point. 50 is exactly mid-range.
What to do at each level
- IV Rank above 70: options are pricey for this name. Lean into selling premium. Credit spreads, broken-wing butterflies, jade lizards.
- IV Rank 30 to 70: middle ground. Trade structure matters more than direction. Pick the trade for the chart, not the IV.
- IV Rank below 20: options are cheap. Premium sellers should mostly stay flat. Buyers can shop for convexity, especially if a catalyst is on the calendar.
The single biggest edge a retail trader has is patience: only sell premium when premium is fat, and only buy premium when premium is cheap.
The catch
IV Rank looks at the past year only. After a year of unusual calm, IV Rank can read 90 even though current IV is by historical standards modest. After a year of constant chaos, IV Rank can read 20 even though current IV is high in absolute terms. Use IV Rank to compare a name to its own history, not to compare across names.
What to do next
The scanner labels this idea as expensive options. Filter to names where options look expensive to lean into the premium-selling edge. Cross check against the chart to make sure you are not selling into a breakout.