What is IV Rank?
IV Rank compares current implied volatility to its range over the past 252 trading days (one year). If current IV is at the highest point in the past year, IV Rank is 100%. If it's at the lowest point, IV Rank is 0%. A 60% IV Rank means current IV is 60% of the way from its 52-week low to its 52-week high — it's in the upper portion of its annual range.
IV Rank vs IV Percentile
These are often confused but they measure different things. IV Rank = (Current IV − 52-week Low) / (52-week High − 52-week Low). IV Percentile = percentage of days in the past year where IV was lower than today. IV Rank is affected more by outlier spikes — one huge IV day stretches the entire range, making even moderately elevated IV appear "low" for months. If a stock had an IV spike to 80% six months ago but normally trades at 25-30%, IV Rank may read near-zero even when IV is above-average. In these cases, check IV Percentile as a sanity check. IV Percentile is more stable. VolRadar displays both so you can compare.
Why premium sellers need IV Rank
Selling options when IV Rank is low means you collect small premiums for the same risk — a bad deal. When IV Rank is above 40%, options are relatively expensive, meaning you get paid more for taking on risk. The ideal range for premium selling is IV Rank 50–70%: expensive enough to justify selling, but not so elevated that a vol spike will destroy your position. Above 70%, premiums are lucrative but risk is elevated — use defined-risk strategies and smaller sizes. VolRadar uses IV Rank ≥40% as one of the conditions for a Strong signal.
IV Rank thresholds
Below 20%: Options are cheap — not ideal for selling. Consider debit strategies or sit out. 20–35%: Below-average volatility. Selling is possible but premiums are thin — pass unless other signals are strong. 35–50%: Average range. Acceptable for selective entries with favorable VRP and RV Ratio. 50–70%: Elevated IV — prime conditions for premium selling. Focus your capital here. Above 70%: Very high IV. Premiums are lucrative but risk is elevated — use defined-risk strategies and smaller position sizes.
Combining IV Rank with other signals
IV Rank alone isn't enough. High IV Rank + high RV Ratio means volatility is elevated everywhere — risky. High IV Rank + low RV Ratio means options are expensive but the stock is calming down — ideal. Add positive VRP and no earnings within your DTE window, and you have the best possible setup for selling premium.