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Technical Indicators

Thu, Jun 5th, 2025
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The descriptions, formulas, and parameters shown below apply to both Interactive Charts and Snapshot Charts, unless noted. Please note that some of the parameters may be slightly different between the two versions of charts.
Studies noted with * are available only in Snapshot Charts and those noted with ^ are available only in Interactive Charts.
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Implied Volatility Rank (IV Rank)

Indicator Type: Standalone

Frequency: Daily Chart Only

Chart Type: Interactive Charts Only

Implied volatility (IV) rank is a statistic that compares the current level of IV to its historical range of values. It's calculated on a scale of 0-100, where 0 represents the lowest IV% for the year and 100 represents the highest. 

Calculation

The formula for calculating IV rank is:

  • IV Rank = (Current IV - IV Low) / (IV High - IV Low) x 100

For example, if a stock's IV has ranged from 30-60% over the past year and is currently trading at 45%, its IV rank would be 50%:

  • IV Rank = (45 - 30) / (60 - 30) = 50%

The underlying implied volatility (IV) is calculated using the Binomial model and reflects the average implied volatility (IV) of the nearest monthly options contract that is 30-days out or more.

An IV Rank at 100% means the IV is at its highest level over the past 1-year, and can signify the market is over-extended, and a strategy that looks to profit from a near term decrease in volatility may be in order.

An IV Rank at 0% means the IV is at its lower level over the past 1-year, and can signify the market is consolidated, and a strategy that looks to profit from near term price movement may be in order.

Generally, an IV rank above 60% is preferred for selling options and IV rank below 40% is preferred for buying options, volatility is expected to eventually return to the mean. In essence, buy low volatility and sell high volatility.

This indicator, when added to the underlying asset, fluctuates between 0 and 100%. We have an upper and lower bound set at 20 and 80, as well as a midline at 50.

Implied Volatility can be plotted as a standalone study, and is also used within the IV Percentile study which is the percentage of days with IV closing below the current IV value over the prior 1-year.

By default, this study is based on 1-year of data, but you may also select to view percentile over different time periods of 5-Day, 1-Month, 3-Month, 6-Month and YTD.

Implied Volatility Rank

Default Parameters:

  • TimeFrame (1-Year): 5-Day, 1-Month, 3 Month, 6-Month, 1-Year, or YTD
  • Oversold (20)
  • Center (50)
  • Overbought (80)
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