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Volatility3 minute read
What is IV Rank?
Understand how IV Rank places current implied volatility within a selected historical high-low range
Prepared by Mark · Primary sources below
Direct answer
IV Rank is a relative measure that places current implied volatility between the highest and lowest implied-volatility readings over a chosen lookback period. A common calculation subtracts the period low from current IV, then divides by the high-low range. It does not predict direction, future IV, a probability of profit, or the expected stock move
It answers a relative question
A raw IV number is hard to interpret without context. IV Rank asks where the current reading falls within a selected past range, such as a one-year range, rather than whether the reading is objectively high or low
The result depends on the definition
The lookback window, the IV series, treatment of new highs or lows, and rounding can differ across platforms. Compare IV Rank values only when those inputs and conventions are known
It cannot answer the whole trade question
A high or low rank does not say whether the stock will rise, fall, or move enough for a particular option position. Strike, expiration, spread width, event risk, and the position's Greeks still matter
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