What Is Implied Volatility Percentile (IV Rank)?
IV Rank (or IV Percentile) measures where the current implied volatility of an option chain sits relative to its 52-week range. An IV Rank of 80 means current IV is higher than 80% of the readings over the past year — IV is elevated.
The interpretation matters for options strategy selection. High IV Rank (above 50-60) favors options-selling strategies (covered calls, iron condors, credit spreads) because premiums are rich. Low IV Rank favors options-buying strategies — premiums are cheap relative to history.
Tastytrade popularized IV Rank as a strategy filter — they only sell premium when IV Rank is above 50. The threshold is somewhat arbitrary but useful as a discipline. The biggest mistake is selling cheap premium (low IV Rank) because the small income doesn't compensate for the tail risk.
Related terms
- Implied Volatility (IV) — Market-expected future volatility, derived from options prices.
- Vega — Sensitivity of an option's price to a 1-point change in implied volatility.
- Iron Condor — Four-leg neutral strategy collecting premium when the underlying stays in a range.
- Covered Call — Selling a call option against shares you already own to collect premium.