IV Rank

A measure of where a stock's current implied volatility stands relative to its own 52-week range — expressed as a percentile from 0 to 100.

IV Rank answers the question: "Is implied volatility high or low right now compared to where it's been over the past year?" It is calculated as: (Current IV − 52-week Low IV) ÷ (52-week High IV − 52-week Low IV) × 100. A reading of 0 means IV is at the lowest it has been in the past year; 100 means it is at the highest; 50 means it is exactly at the midpoint of its 52-week range.

IV Rank is important because raw IV levels are not meaningful across different underlyings — a 30% IV might be historically high for a utility stock but historically low for a biotech. IV Rank normalizes IV to each stock's own historical behavior, making comparisons meaningful. Many premium sellers look for IV Rank above 50 (ideally above 70) before selling options, indicating that IV is elevated relative to its recent history and likely to mean-revert lower.

A limitation of IV Rank is that it can be misleading when a stock has had unusual volatility events skewing the 52-week range. If a stock had one extreme volatility spike 11 months ago, all current readings will appear low by comparison. IV Percentile addresses this by looking at the percentage of days in the past year where IV was lower than the current level, which is more robust to outliers.

This definition is for informational and educational purposes only. Nothing on Finance Compass constitutes financial, investment, or trading advice. Always conduct your own research and consult a qualified professional before making financial decisions.