What It Means
IV Rank tells you where an option's current implied volatility sits compared to its own high and low over the past year, expressed as a number from 0 to 100. It answers the question a raw IV number can't: is this IV actually high or low for this specific stock, right now.
How It Works
IV Rank = (Current IV - 52-Week Low IV) / (52-Week High IV - 52-Week Low IV) × 100
- Current IV
- Today's implied volatility reading for the option
- 52-Week Low IV
- The lowest IV that stock's options have shown in the past year
- 52-Week High IV
- The highest IV that stock's options have shown in the past year
An IV Rank of 0 means today's IV is the lowest it's been all year. A rank of 100 means it's the highest. Many traders treat anything above roughly 50 as elevated IV, worth considering for selling premium, and anything below roughly 30 as low IV, worth considering for buying premium. Treat those as loose reference points, not fixed rules.
Example
A Bengaluru software employee checks Reliance's option chain before selling a covered call. Reliance's IV has ranged between 18% and 34% over the past year, and today it's showing 30%. Plugging that into the formula: (30-18) / (34-18) × 100 = 75. An IV Rank of 75 tells her today's IV is high for Reliance specifically, even though 30% on its own might look unremarkable next to a more volatile mid-cap stock. That's a reasonable setup for someone looking to sell premium rather than buy it.
Common Variants
IV Percentile is the close cousin of IV Rank, and the two get used interchangeably even though they're calculated differently. IV Percentile counts the percentage of trading days in the past year where IV closed below today's level, rather than comparing today's IV to just the year's high and low. A stock that spent most of the year in a tight IV band can show a very different IV Percentile than IV Rank for the exact same raw IV number, because Percentile cares about how often that level showed up, not just where it falls between the two extremes.