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The percentage of days in the past year when IV was lower than today. Different from IV Rank: percentile is time-based, rank is range-based.
⚡ KEY TAKEAWAY: IV Percentile 80 = IV was lower than today 80% of the time. High percentile confirms elevated premiums.
Implied Volatility (IV)
Higher IV = more premium to collect when selling options. But also more risk if the stock moves.
Realized Volatility (RV)
When RV is lower than IV, options are overpriced relative to actual movement — the core edge for sellers.
IV Rank
IV Rank > 50 = premiums elevated, good for selling. Below 30 = cheap, consider waiting.
Volatility Risk Premium (VRP)
VRP > +5pp = strong seller edge. VRP 2–5pp = moderate edge. VRP 0–2pp = marginal edge, be selective. VRP < 0 = avoid selling premium.