What is IV rank?

IV rank measures where a stock's implied volatility sits in its own range over the past year, on a scale from 0 to 100. It turns a raw volatility number that means nothing on its own into something you can actually compare.

How it is calculated

Implied volatility (IV) is the market's estimate of how much a stock will move, backed out of its option prices. The problem is that a raw IV is meaningless in isolation: 40 percent might be dead calm for a small-cap biotech and sky-high for a utility. IV rank fixes that by asking a simple question: over the last year, what were this stock's lowest and highest IV readings, and where does today fall between them? If IV ranged from 20 to 60 percent and today is 50, that is an IV rank of 75, three quarters of the way up its own range.

IV rank vs IV percentile

These two get mixed up constantly. IV rank uses only the high and the low of the past year, so a single freak spike can stretch the range and pull rank down. IV percentile instead asks what share of trading days in the past year had a lower IV than today, so it is less sensitive to one outlier. Rank cares about the range; percentile cares about how often. They usually tell the same story, but when one earnings spike distorts the year, percentile is often the steadier read.

Why traders watch it

IV rank is mostly an options-seller's tool. Premium is expensive when IV rank is high and cheap when it is low, so sellers of covered calls, cash-secured puts, and spreads prefer to sell when rank is elevated and volatility is more likely to fall back toward its average. Option buyers often want the opposite, paying up only when volatility is cheap. Either way, rank tells you whether premium is rich or cheap for that specific name, not which direction the stock will go.

How MomentumSift uses it

Free options data only exposes today's implied volatility, so IV rank cannot be backfilled. MomentumSift stores one at-the-money IV snapshot per stock per day and derives IV rank from that trailing-year window once enough history has accrued, falling back to a realized-volatility rank as a proxy for names that are still building history. You can then screen for high IV rank directly in the high IV rank screener.

FAQ

What is IV rank?

It measures where a stock's current implied volatility sits between its one-year low and high, scaled 0 to 100. An IV rank of 100 means IV is at its one-year high, 0 means its low, and 50 the midpoint.

What is the difference between IV rank and IV percentile?

IV rank looks at the high and low of the past year and asks where today sits between them, so one spike can stretch the range. IV percentile asks what fraction of days had a lower IV than today. Rank cares about the range; percentile about how often.

What is a good IV rank for selling options?

Many sellers look for an IV rank above about 50, often above 70, so they sell when volatility is expensive and more likely to fall. There is no magic number, and high IV rank often reflects real risk like earnings, so it is a starting filter, not a signal.